COLOMBO: The Sri Lankan rupee fell on Monday due to seasonal importer dollar demand ahead of the festive season in December, dealers said. The local currency would be under downward pressure due to continued importer demand until the end of the year, they added.
The spot rupee was quoted at 146.85 per dollar at 0713 GMT, but there was hardly any trade for a second day, dealers said. It closed at 146.88/95 on Thursday. Rupee forwards were active, and the spot-next was at 147.05/10, compared with the previous day’s close of 146.95/147.05, dealers said.
“Seasonal importer demand is there. The spot did not trade because dealers are scared of the central bank’s retribution after the moral suasion,” a currency dealer said, asking not to be named.
The market expects the local currency to be under pressure due to seasonal demand from importers until the year-end.
Dealers said foreign buying into government securities has slowed with the fall in interest rates while the central bank has been buying dollars from the market to accumulate reserves to meet the targets set by the International Monetary Fund under a $1.5 billion loan deal. Officials at the central bank were not available for comment.
The central bank has been under pressure from the (IMF) to continue rebuilding international reserves and maintain exchange rate flexibility to develop the foreign exchange market further.
The central bank usually intervenes to curb volatility in the market.
