Rupee forwards end steady amid CB moral suasion

Reuters - Sri Lankan rupee forwards ended steady on Wednesday as dealers were reluctant to trade at levels lower than 147.00 due to moral suasion by the central bank, dealers said.

The market also shrugged off a comment by Finance Minister Ravi Karunanayake, who said on Tuesday that the currency would stabilise in June after money from an IMF loan flows in.

The dollar/rupee forwards, known as spot next, ended steady at 146.90/147.00 per dollar.

Dealers said one of the two state-run banks, through which the central bank usually directs the market, sold dollars at 146.75 to select banks.

Officials at the central bank were not immediately available for comment.

“There were lack of dollar conversions from the foreign bond buyers. I think they are selling short tenure and buying in longer tenure,” a currency dealer said, asking not to be named.

Dealers also said pressure on the local currency is expected to ease on expected fund inflows following the loan deal with the International Monetary Fund and on a plan to raise $1.5 billion through a possible sale of a 10-year sovereign bond. Karunanayake said on Tuesday exporters are bringing in dollars and that there was “some sense of consolidation coming in” on the currency.

Analysts however said the market was waiting for the inflows to actually materialise, although it helped boost sentiment initially.

In April, exporters were asked to repatriate earnings held abroad within 90 days of the export date, to improve foreign exchange inflows into the country.

Trading in the spot currency has been intermittent since Jan. 27, and it was barely bid on Wednesday as well. The spot rupee reference rate was pegged at 145.75, the dealers said.

Sri Lanka’s central bank fixed the spot trading rate at 143.90 per dollar until May 2, they said, adding foreign investors bought more government bonds last week, which also helped the currency.

Government securities held by foreign investors rose by 11.1 billion rupees ($76.29 million) to 232.7 billion rupees in the week ended May 11, the latest central bank data showed.