COLOMBO, June 24 The Sri Lankan rupee traded
slightly weaker on Tuesday as importer dollar demand outpaced
greenback sales by exporters, while dealers raised concerns
about possible U.S. sanctions after the country imported Iran
crude via third parties.
Dealers said the rupee would be under pressure if the United
States takes any action against Sri Lanka for importing Iranian
crude via third parties.
The rupee was at 130.28/32 per dollar at 0653 GMT
weaker from Monday's close of 130.25/30.
Currency dealers said it was too early to speculate any
implications over the country breaching the U.S. sanctions law.
"In the event Sri Lanka had breached the sanctions, we don't
know how the U.S. would react. It could be an economic sanction
or sanctions on specific institutions," a currency dealer said
on condition of anonymity.
The Sri Lankan government spokesman said on Thursday the
island nation had been buying Iranian crude from various
countries via third parties, with the understanding of the
The U.S. has denied it had any agreement with Sri Lanka to
allow Colombo to import Iranian crude via third parties.
State Department deputy spokeswoman Marie Harf on Friday
said in the event of Sri Lankan breaching the sanctions, the
U.S. would have to consider our response consistent with its
legal obligations and "any violations would immediately make the
company or institution vulnerable to sanctions."
Sri Lanka's oil import bill could rise if it has to buy more
refined oil, dealers said. However, the country's foreign
ministry has rejected the government spokesman's claim.
Dealers expect the currency to be stable, if there is no
pressure from the oil import bills, due to rising exports and a
fall in imports and private sector credit growth.
On Monday, the island nation's national carrier, Sri Lankan
Airlines priced a $175 million five-year, government-guaranteed
bond, for a yield of 5.3 percent.
Dealers said the bond proceeding could help boost the
reserves and give more room for central bank to intervene in the
The rupee has appreciated 0.4 percent during the year up to
June 19, the central bank said in a statement on Friday, while
the central bank had absorbed around $550 million from the
domestic foreign exchange market this year through June 17.
Sri Lanka's main stock index was up 0.2 percent, or
12.56 points, at 6,311.91 as of 0714 GMT. Turnover was 651.8
million rupees ($5.01 million), with 48 million shares changing
($1 = 130.2000 Sri Lankan Rupees)
(Reporting by Ranga Sirilal and Shihar Aneez)