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Sri Lankan rupee eases on importer dollar demand; stocks up
April 30, 2014 / 5:56 AM / 3 years ago

Sri Lankan rupee eases on importer dollar demand; stocks up

COLOMBO, April 30 (Reuters) - The Sri Lankan rupee traded weaker on Wednesday due to importer dollar demand, and dealers said they expect the currency to remain stable in the near term in the absence of a pick-up in private sector credit.

The spot rupee was traded at 130.62/65 per dollar at 0524 GMT, a tad down from Tuesday’s close of 130.61/63.

“A little bit of demand (for dollars) is there to meet importer (dollar) demand,” said a currency dealer.

Lower credit demand from the private sector, even though key interest rates have been at multi-year lows since January, has surprised dealers.

At an auction on Tuesday, the central bank rejected all bids for the benchmark 91-day treasury bills with yields already at their lowest since January 2007, data showed.

Last week, the central bank kept policy rates steady at multi-year lows.

Private sector credit grew 4.4 percent year-on-year in February, the slowest since May 2010, latest data from the central bank showed. That compared with a growth of 5.2 percent in January this year and 13.3 percent in February 2013.

The central bank, in its monetary policy statement last week, expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion.

Dealers expect the rupee to trade in a range of 130.60-130.70 in the near future until credit growth picks up. The currency has been hovering between 130.55 and 130.70 since March 3, Thomson Reuters data showed, with the central bank intervening to smoothen any sharp volatility.

Sri Lanka’s main stock index was up 0.45 percent, or 28.12 points, at 6,214.37 as of 0530 GMT. Turnover was at 401.2 million rupees ($3.07 million), with 17.3 million shares traded.

Shares in Aitken Spence Company PLC rose 1.02 percent to 99 rupees a share while shares in Union Bank PLC were up 1.4 percent at 21.70 rupees. ($1 = 130.6100 Sri Lanka rupees) (Reporting by Ranga Sirilal; Editing by Sunil Nair)

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