Rupee forwards rise on dollar selling by state bank
Reuters: Rupee forwards ended firmer on Tuesday as a state-run lender sold dollars ahead of holidays on Wednesday and Thursday even as traders sought clarity on economic policy from the newly-elected Government led by President Maithripala Sirisena.
Four-day forwards, which were actively traded, closed higher at 132.25/35 per dollar, compared to Monday’s close of 132.75/85.
“A state bank sold dollars and allowed the rupee to appreciate up to 132.00. Then, the same state bank started to mop up dollars to allow for a little depreciation,” a stockbroker said.
The markets will be closed for a special holiday on Wednesday in view of Pope Francis’ visit to Sri Lanka, while they will be shut for a Hindu religious holiday on Thursday. Normal trading will resume on Friday.
Sirisena announced an interim cabinet on Monday and said he would carry out reforms to fight corruption in the 100 days to a parliamentary election.
The market is expecting a flexible exchange rate with more foreign grants under Sirisena’s rule as opposed to the fixed and controlled exchange rate regime under the previous government.
The spot currency was not traded on Tuesday.
Sri Lankan spots traded in a band between Rs. 130.00 and Rs. 131.75 throughout 2014 following the Central Bank’s move to limit volatility in the currency and ensure a stable exchange rate.