Reuters – Feb 8 The Sri Lankan rupee traded weaker on Wednesday due to dollar demand from banks to facilitate continuous exit of foreign investors from government securities amid importer demand for the greenback, dealers said.
The central bank revised on Tuesday the spot rupee reference rate to a record low of 150.75 from 150.50 amid downward pressure, dealers said.
Rupee forwards were active, with two-week forwards trading at 151.30/35 per dollar at 0454 GMT, compared with Tuesday’s close of 151.22/32.
“There is demand for dollar from local banks for general imports and from foreign banks to facilitate foreign bond exits,” said a currency dealers asking not to be named.
Officials at the central bank were not available for comment.
The central bank kept its key rates steady on Tuesday for a sixth straight month, but flagged possible “corrective measures” in the months ahead in a sign further tightening might be on the cards to temper inflation pressures and safeguard a fragile rupee.
The rupee has weakened 0.5 percent so far this year and has been under pressure due to rising imports and net selling of government securities by foreign investors, while the central bank said defending the currency with foreign exchange reserves did not “seem sensible”.
Foreign investors net sold 26.6 billion rupees ($177.10 million) worth of government securities in the four weeks to Feb. 1, according to latest central bank data.
Sri Lankan shares were up 0.2 percent at 6,106.72, as of 0502 GMT. Turnover stood at 171.1 million rupees ($1.14 million).