Sri Lankan ru­pee steady; mar­ket seeks clar­ity from bud­get

The Financial Daily - - INTERNATIONAL -

COLOMBO: Sri Lankan ru­pee for­wards traded steady on Wed­nes­day as the cen­tral bank capped a fall in the cur­rency on im­porter dol­lar de­mand while ex­porters awaited direc­tion from a sup­ple­men­tary bud­get sched­uled for Thurs­day, deal­ers said.

Fears of pos­si­ble de­pre­ci­a­tion in the cur­rency kept ex­porters away from the mar­ket.

The cen­tral bank capped four-day for­ward at 133.00, which forced deal­ers to trade one-week for­wards ac­tively for the sec­ond straight ses­sion, deal­ers said.

One-week for­wards traded steady at 133.45/55 per dol­lar at 0600 GMT

Four-day for­wards quoted at 133.00/40 per dol­lar at 0551 GMT com­pared with Tues­day's close of 133.00/133.50. They fell 0.45 per­cent last week, mar­ket data showed.

"The day-to-day im­port de­mand is there and ex­porters are not do­ing any­thing, prob­a­bly await­ing the out­come of to­mor­row's bud­get," a dealer said.

Deal­ers said con­cerns over the cen­tral bank and the mar­ket not agree­ing on the price of the cur­rency weighed on sen­ti­ment.

Deal­ers said the mar­ket is ex­pect­ing a de­pre­ci­a­tion in the short term with the widen­ing trade bal­ance and in line with global cur­ren­cies.

The spot cur­rency has not been trad­ing, while for­wards have been trad­ing with down­ward pres­sure as the cen­tral bank capped the ru­pee through moral sua­sion, deal­ers said.

The new cen­tral bank gov­er­nor, Ar­juna Ma­hen­dran, told Reuters on Tues­day that the cur­rent for­eign ex­change pol­icy does not need "any big changes" and ex­pects the cur­rency to sta­bilise end­ing the de­pre­ci­a­tion trend since Au­gust. Some deal­ers said ex­porters are wait­ing for clar­ity from the new govern­ment's eco­nomic pol­icy as they are con­fused af­ter the cen­tral bank gov­er­nor kept rates steady on Tues­day, say­ing the econ­omy was do­ing well, but the fi­nance min­is­ter crit­i­cised the pre­vi­ous govern­ment's eco­nomic man­age­ment.,

Fi­nance Min­is­ter Ravi Karunanayake will present the sup­ple­men­tary bud­get on Thurs­day, aim­ing to ful­fil elec­tion pledges by Pres­i­dent Maithri­pala Sirisena that in­cluded pay hikes for the state sec­tor and price re­duc­tions on essen­tial goods.

The mar­ket had been ex­pect­ing a flex­i­ble ex­change rate with more for­eign grants un­der the new govern­ment as op­posed to the con­trolled ex­change rate regime ear­lier.

The main stock in­dex was up 0.3 per­cent or 21.85 points at 7,390.33 at 0546 GMT, trad­ing at its high­est since Jan. 20. -Reuters

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