Thursday, 15 August 2013 00:01
(Reuters) - The Sri Lankan rupee ended firmer on Wednesday on the back of dollar inflows into shares and treasury bonds, prompting dealers to revert back to trade on spot dollar from one-day forwards.
Dealers were forced to trade one-day forwards in the last two weeks as the central bank asked banks to not to buy dollars beyond 131.60 rupees.
The rupee currency spot ended at 131.50/58 per dollar, firmer than Tuesday’s close of 131.60. The one-day forwards also ended firmer at 131.62/70 per dollar from Tuesday’s close of 131.66/72.
“The rupee ended firmer on dollar inflows into stocks, T-bonds and T-bills,” said a currency dealer adding the demand from the state banks will decide the rupee’s course.
The rupee has fallen about 4 percent between June 7 and July 18, after foreign investors started pulling out of Sri Lanka’s treasury bonds due to a rise in U.S. treasury yields.
The currency has been steady around 131.60 since July 18 as the central bank has not been allowing the spot dollar to be traded beyond 131.60 amid a rise in foreign holding in government securities, dealers said.
Dealers expect the rupee to move in a 131.50 to 132.00 range in the short term and continue to depreciate unless the central bank steps in or dollar inflows increase significantly.