COLOMBO: The Sri Lankan rupee was steady in dull trade on Wednesday as export conversions offset importer dollar demand, while the central bank cut the spot rupee <LKR=LK> reference rate by 10 cents to 151.60, dealers said. The market has been awaiting an easing of downward pressure on the currency after the central bank raised interest rates last month, they said. The central bank raised interest rates by 25 basis points on March 24, for the first time in eight months, saying tighter policy was a precaution against a build-up of inflationary pressures.
The rate hike was expected to help stabilise the rupee as rising imports and outflows due to rupee bond sales by foreign investors have exerted pressure on the currency, analysts said. “But the pressure is still there if not for some exporter dollar conversions and inward remittances because of the new year festival next week,” a dealer said, asking not to be named. Rupee forwards <SLKR> were active, with two-week forwards trading steady at 152.40/50 per dollar at 0807 GMT. The rupee has been under pressure as foreign investors have been exiting government securities and on seasonal dollar demand ahead of the April 13-14 holiday. Foreign investors net bought government securities worth 70 million rupees($461,285) in the week ended March 22. They have net sold 63.2 billion rupees of such instruments so far this year. Sri Lankan shares <.CSE> were up 0.71 percent at 6,190.23 as of 0815 GMT. Turnover stood at 546 million rupees ($3.60 million).
