Rupee steady; remittances offset importer dollar demand

Saturday, 4 July 2015 02:10 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee ended steady on Friday as remittances offset importer dollar demand, while a state-run bank, through which the central bank usually directs the market, sold dollars at 133.60, dealers said.

On Thursday, the state bank lowered the dollar selling rate by 10 cents from the previous session’s close of 133.70.

The spot rupee traded steady at 133.60 per dollar. “Importer demand is met by remittances and the state bank offered dollars at 133.60 rupees,” a currency dealer said. Some dealers question whether the central bank could sustain the appreciation as import demand could pick up due to lower interest rates, while pressure on the rupee could build up again as exporters might stop selling dollars until the elections are over.

President Maithripala Sirisena dissolved parliament on June 26 and scheduled the election for Aug. 17 in an effort to consolidate power and push through political reforms, ending a months-long deadlock.

Depreciation pressure on the currency eased, dealers said, after Finance Minister Ravi Karunanayake said early last week that the spot would climb 3 percent to a two-year high of 130 per dollar in two weeks.

Dealers, however, said that with the announcement of the elections, the rupee may not reach that level.

Three-month forwards were trading steady at 135.30/40 per dollar, dealers said.

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