Sri Lankan rupee rises on dollar conversions by exporters

COLOMBO, June 10 (Reuters) – Sri Lankan rupee forwards rose on Friday as dollar conversions by foreign investors and banks surpassed importer demand for the U.S. currency, dealers said.

The spot rupee, which was traded actively for a third straight day, also rose, they added.

Dollar/rupee forwards, known as spot next, were at 145.00/05 per dollar, compared with Thursday’s close of 145.53/63.

Spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following conventional spot settlement, which is five days ahead for Friday’s trade.

Dealers said the spot currency, which on Wednesday started trading actively for the first time since January 18, was active for a third straight day on Friday.

The spot rupee ended at 144.95/145.05 per dollar, compared with Thursday’s close of 145.50/60.

"Foreigners are selling (dollars) to buy local rupee bonds. The spot is actively trading. There were selling by banks also," a currency dealer said.

The spot rupee reference rate was pegged at 145.75 through Wednesday, and at 145.50 since Thursday.

Two state-run banks, through which the Central Bank usually directs the market, sometimes sell dollars to curb falls in the rupee.

Central Bank officials were not available for comment on whether it had intervened in the forex market.

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Dealers expect the local currency to strengthen further, after the International Monetary Fund’s (IMF) executive board approved a three-year $1.5 billion loan to support the country’s economic reforms agenda.

Prime Minister Ranil Wickremesinghe told parliament on Thursday that the government would take measures to abolish the Exchange Control Act and also soon introduce a capital gains tax, but did not provide a timeframe.

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