Rupee ends up on banks’ dollar sales

Reuters - The Sri Lankan rupee ended firmer on Friday, helped by inward remittances and banks’ dollar sales, while dealers said downward pressure on the local currency would likely ease due to expected inflows in the near future.

The spot rupee reference rate stood at 145.70, dealers said.

The banking regulator had fixed the spot trading rate at 143.90 per dollar until Monday, dealers said, but Central Bank officials were not available to comment on whether it had intervened in the forex market.

Trading in spot has been intermittent since 27 January and on Friday the spot was barely bid, but some movement in short-term dollar/rupee forwards indicated the rupee was trading firmer.

The spot next dollar/rupee forwards ended at 146.10/20 per dollar, compared with Thursday’s close of 146.15/30.

The spot next, which acts as a proxy for the spot currency, indicates the exchange rate for the day following the conventional spot settlement, meaning it is five days ahead.

“The downward pressure is easing gradually. There are some inflows from foreign bond buying after the positive news on IMF and sovereign bond,” a currency dealer said, asking not to be named.

Another dealer said there were some inward remittances in the latter part of the day which helped to ease the pressure on the rupee.

Dealers said the loan deal with the IMF and a likely $1.5-billion bond issue in the short term have helped build confidence in the currency.

The International Monetary Fund last week said it had reached a staff-level agreement with Sri Lankan authorities for a $1.5 billion, three-year loan that would help the island nation avert a balance of payments crisis.

A top finance ministry official told Reuters on Sunday that the government would raise $1.5 billion by selling 10-year sovereign bonds within the next 10 to 12 days.