Sri Lankan rupee forwards edged down yesterday on dollar demand from importers, but the fall was capped on moral suasion by the central bank, dealers said.
The dollar/rupee forwards, known as spot next, were at 146.80/95 per dollar at 0510 GMT, weaker from Monday’s close of 146.75/85.
“Again the rupee is getting weaker despite the regulation of bringing in exports proceeds in 90 days. Still, the currency is depreciating and I can’t figure out any reason,” a currency dealer said, asking not to be named.
“There is importer demand (for dollars).”
Sri Lanka’s central bank said in April that the country’s finance minister asked exporters to repatriate earnings held abroad within 90 days of the date of export of goods, to improve foreign exchange inflows into the country.
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 was three days ahead for yesterday’s trade.
The pressure on the local currency is likely to ease, dealers said, on expected fund inflows following a loan deal with the International Monetary Fund (IMF) and a plan to raise $1.5bn through the sale of a 10-year sovereign bond within the next few days.
Trading in the spot currency, however, has been intermittent since January 27, and it was barely bid on yesterday as well. The spot rupee reference rate was pegged at 145.75, the dealers said.
Sri Lanka’s central bank fixed the spot trading rate at 143.90 per dollar until May 2, dealers said, but officials at the banking regulator were not available for comment on whether it had intervened in the forex market.
Dealers also said the currency was helped as the trend of foreign investors exiting their positions in government bonds has been reversed. Government securities held by foreign investors rose by 11.1bn rupees ($76.29mn) to 232.7bn rupees in the week ended May 11, the latest central bank data showed.