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Rupee edges up on foreign bank dollar sales

The Sri Lankan rupee firmed on Thursday on dollar selling by foreign banks, even as depreciation pressure on the rupee eased, helped by strong inflows from foreign borrowings, dealers said.

Rupee forwards were active, with spot-next forwards trading at 152.80/90 per dollar at 0553 GMT, compared with Wednesday’s close of 152.85/90.

One-week forwards were at 152.90/153.00 per dollar, compared with Wednesday’s close of 152.95/153.00.

“We have seen two foreign banks on the (dollar) selling side, probably for T-bond buying,” a currency dealer said, asking not to be named.

The spot rupee did not trade on Thursday. The central bank fixed the spot rupee reference rate at 152.50 on May 5.

Central Bank Governor Indrajit Coomaraswamy said last week that the monetary authority did not want to allow the rupee to fall “too quickly”, but suggested further weakness in the exchange rate was on the cards as policymakers sought a competitive currency.

The downward adjustment to the spot currency was to make the rupee more competitive, he added.

The central bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.

Sri Lanka regained a lucrative European Union trade concession with effect from Friday, but analysts said they were waiting to see the real impact of the facility.


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