Sri Lankan rupee forwards steady on moral suasion
COLOMBO, April 21 (Reuters) – Sri Lankan rupee forwards traded steady on Tuesday on moral suasion by the central bank amid importer dollar demand, while the local currency is expected to be under pressure until the middle of this year due to lower interest rates.
Actively traded two-week forwards were at 133.90/134.00 per dollar, compared with Monday’s close of 133.90/95, while one-week forwards were steady at 133.60/70.
"Import bills are there and there is downward pressure. The central bank’s moral suasion is preventing two-week forwards from trading below 133.90 per dollar," said a currency dealer asking not to be named.
Dealers said the rupee would be under pressure through May and June as credit growth is expected to hit a peak in a lower interest rate environment.
The central bank cut key rates on Wednesday in a surprise move to record lows and said in its monetary policy statement that the outlook on balance of payments remains favourable in 2015.
Finance Minister Ravi Karunanayake on Wednesday said there were sufficient funds to defend the currency and a lot of foreign inflows are expected.
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 immediately available for comment.