Sri Lankan rupee forwards firm up on exporter dollar sales
COLOMBO (Reuters) – Sri Lankan rupee forwards traded slightly firmer on Monday due to exporter dollar sales, but dealers said the pressure on the local currency would persist through the middle of this year on lower interest rates amid political uncertainty.
Actively traded one-month forwards were trading at 134.40/60 per dollar at 0637 GMT, firmer from Friday’s close of 134.75/95.
"Exporters have come to the market and we see some upward movement in the one-month (rupee) forwards," said a currency dealer asking not to be named.
Two-week and one-week forwards were steady at 133.90/134.00 and 133.60/70 per dollar, respectively.
The central bank through moral suasion prevented the spot rupee from dropping below 132.90/133.20, a limit it set in February.
Central bank officials were not available for comment.
Currency dealers said political uncertainty has been weighing on investor confidence and putting pressure on the exchange rate after President Maithripala Sirisena’s 100-day programme ended on Thursday.
Sirisena, who promised to dissolve parliament after the end of his 100-day programme on April 23, addressed the nation later on Thursday and sought support of all legislators to pass constitutional and electoral reforms.
The parliament on Monday started a two-day debate on constitutional reforms, including establishing independent police, judiciary, and election and public service commissions.
Currency dealers said the rupee would also be under pressure through June as credit growth was expected to hit a peak due to lower interest rates.
In a surprise move, the central bank on April 15 cut key rates to record lows and said the outlook on balance of payments remains favourable in 2015.
The main stock index was down 0.22 percent at 7,113.91 at 0642 GMT led by financials, slipping from its over six-week high hit on Friday.
Turnover stood at 339.3 million rupees ($2.55 million). ($1 = 132.9000 Sri Lankan rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Biju Dwarakanath)