Sri Lanka rupee weaker on importer dlr demand; shares steady
COLOMBO, Sept 30
COLOMBO, Sept 30 (Reuters) - The Sri Lankan rupee was slightly weaker on Monday morning due to importer dollar demand, but an earlier central bank direction asking banks not to trade above 132.00 per dollar prevented further falls, dealers said.
Though Sri Lanka has a floating exchange rate, the central bank usually intervenes during times of sharp volatility through several measures including moral suasion.
The rupee spot was quoted at 131.95/132.15 at 0515 GMT, compared with Friday's close of 131.90/132.10.
Sri Lanka's main stock index was largely steady at 0540 GMT.
"Since it's the first day of the week, we've seen some (import) bills," said a currency dealer who declined to be named.
The spot next or three-day forward, which was active in the market, was quoted at 132.08/15 per dollar compared with Friday's close of 132.10/15 per dollar.
Central bank Governor Ajith Nivard Cabraal said earlier this month that moral suasion was in the Monetary Law Act as well as in the banking laws of many countries and central banks were expected to make use of such instruments.
The International Monetary Fund last week urged the central bank to limit its intervention in the rupee exchange rate "to dealing with excessive short term volatility". "
Some dealers expect the rupee to falter in the medium term because of the recent pressure due to a lack of steady dollar inflows from exports and remittances from overseas workers.
The currency hit a record low of 135.20 on Aug. 28, but has managed to stem further losses since then. It has fallen 3.3 percent this year, after depreciating about 10 percent in 2012.
The rupee has been falling since early July when foreign investors started pulling out of local bonds as U.S. Treasury yields rose in anticipation of the Federal Reserve's tapering of its stimulus. But the Fed stuck to its $85 billion-a-month bond-buying programme at its policy review on Sept. 18, helping to steady the rupee and other risk-sensitive currencies globally.
($1 = 132.0250 Sri Lanka rupees)
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