Rupee edges up on bank dollar sales

Saturday, 9 January 2016 00:00 -     - {{hitsCtrl.values.hits}}

(Reuters) - The Sri Lankan rupee ended 0.1% firmer on Friday as dollar sales by a private bank helped boost the local currency amid continued demand for the greenback from importers, dealers said.

The rupee closed at 143.75/85 per dollar, up from Thursday’s close of 143.90/95. It hit a record low of 144.30 on Monday.

“Rupee is trading firmer on bank dollar sales. But it is still under pressure due to import demand. A private bank sold dollars at 143.80 in the morning and then reduced to 143.75 later. That helped the rupee to strengthen,” said a currency dealer on condition of anonymity.

Some dealers said the private bank could have sold dollars on behalf of the Central Bank. Officials at the Central Bank were not available for comment.

The Central Bank, in a move to instil investor confidence, on Monday said it would lift all restrictions on outflows by nationals who send money that is earned in foreign currencies.

Central Bank Governor Arjuna Mahendran last week said the steep fall in the rupee has slowed and the currency seems to be stabilising at the current level, due to inflows from remittances.

Some analysts expect the rupee to stabilise due to a gradual rise in market interest rates. Yields on 91-day t-bills rose by 14 basis points to a more-than-two-month high at a weekly auction on Wednesday, after the Central Bank raised the statutory reserve ratio by 150 basis points with effect from 16 January.

Commercial banks parked 87.546 billion rupees ($609.23 million) of surplus liquidity on Friday using the Central Bank’s deposit facility at 6%, official data showed.