Sri Lankan rupee weaker; remittances prevent steeper fall

Oct 31, 2016 (Reuters) – The Sri Lankan rupee traded weaker on Monday due to importer dollar demand, but the month-end inward remittances capped the fall, dealers said. Rupee forwards were active, with one-week forwards trading slightly weaker at 148.30/40 per dollar compared with Friday's close of 148.25/30. "The month-end inward remittances are there, but rupee is trading weaker on importer (dollar) demand," a currency dealer said, asking not to be named. The central bank on Friday raised the spot reference rate by 50 cents to 147.
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40 per dollar from previous rate of 146.90 as higher importer dollar demand weighed on the currency while the moral suasion by the central bank prevented a steeper fall. The spot rupee is usually managed by the central bank, and market participants use the forward market levels for guidance on the currency. Officials from the central bank were not available for comment. Dealers said foreign selling in government securities also put pressure on the currency. Foreign investors have sold a net 16 billion rupees ($108.40 million) worth of government securities in the two weeks ended Oct. 26, data from the central bank showed. Dealers said the market was waiting for a direction from the national budget, which is due on Nov. 10. Dealers said the market had shrugged off a long-awaited economic statement by Prime Minister Ranil Wickremesinghe, who on Thursday said the government will introduce a lower tax regime and concessions on investments in its next budget to boost faltering investment. Sri Lankan shares were firmer, with the benchmark Colombo stock index up 0.03 percent at 6,427.06 as of 0528 GMT. Turnover stood at 17.8 million rupees ($120,596.21).