COLOMBO: The Sri Lankan rupee traded steady on Wednesday, as dollar selling by banks offset importer demand for the greenback, while the market expects the local currency to appreciate due to inflows, dealers said. The spot rupee traded at 153.20/25 per dollar, as of 0628 GMT, compared with Tuesday’s close of 153.20/30. “Importer (dollar) demand is there today, but we have also seen some foreigners selling dollars. It could be to buy government securities,” a currency dealer said, requesting anonymity. “We haven’t seen dollar demand for oil imports and from the state. That may be the reason rupee is trading steady.”
Another dealer said the market is expecting some foreign inflows after Reserve Bank of India last week cut its main policy rate. Analysts said the market shrugged off Thursday’s policy decision by the central bank as it was widely expected. The central bank held its policy rates steady on Thursday and said tightening measures are helping cool inflation and credit growth, signalling receding concerns about price pressure as it focuses on supporting an economy hit by extreme weather.
Central Bank Governor Indrajit Coomaraswamy on Thursday said the bank had expected to purchase 1.2 billion dollars directly from the market between March and December, and it had already bought around $1 billion. Coomaraswamy had earlier said the rupee was still “over-valued”, and that the monetary authority was buying dollars to avoid any appreciation. The banking regulator is compelled to buy dollars from the market to meet a reserves target set by the International Monetary Fund (IMF) under a $1.5 billion, three-year loan programme. Sri Lankan shares were 0.09 percent weaker at 6,518.01, as of 0640 GMT. Turnover was 489.3 million rupees ($3.19 million).
