Rupee ends firmer in dull trade

The Sri Lankan rupee ended firmer yesterday in dull trade due to dollar selling by a state bank, a day after the central bank said underlying fundamentals do not warrant the current downward pressure on the currency.

The rupee hit a record low for a third straight session on Wednesday at 158.50 per dollar after the central bank chief said on Friday that the currency would depreciate gradually as dollar outflows surpass inflows.

The spot rupee closed at 157.65/95 per dollar, compared with Wednesday’s close of 158.00/30.

“Today there was not much of pressure as we have not seen importers. A state bank sold dollars and we don’t know whether it’s their flows or intervention,” a currency dealer said.

The currency has declined 0.06 percent so far this month after a 1.5 percent fall in April. It has fallen 2.8 percent this year.

The pressure on the currency is unwarranted as the gross external reserves are presently at US$ 9.1 billion and the real effective exchange rate indexes indicate that the currency is competitive, the Central Bank said on Wednesday.

The Central Bank is “studying carefully” if there was extra pressure on the currency than what was expected, and also the behaviour of market participants, Central Bank chief Indrajit Coomarswamy had said on Friday.

The Central Bank said on April 26 it would intervene to support the rupee when necessary and there was no reason for the rupee to be under pressure given the country’s record US$ 10 billion foreign currency reserves.