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Sri Lanka rupee steady; gains seen on bond inflows, cbank action awaited
January 7, 2014 / 5:27 AM / 4 years ago

Sri Lanka rupee steady; gains seen on bond inflows, cbank action awaited

COLOMBO, Jan 7 (Reuters) - The Sri Lankan rupee traded steady on Tuesday in dull trade as exporter dollar sales offset light importer dollar demand, but dealers said the currency was under appreciation pressure due to an expected $1 billion inflow from a bond sale.

The spot rupee traded flat at 130.70/75 per dollar at 0508 GMT.

“The rupee is under pressure to appreciate,” a currency dealer said on condition of anonymity. “But the appreciation would depend on what the central bank wants to do. If it wants to keep the rupee at the current level and support exporters, then it would buy all the bond inflow.”

A source close to the sovereign bond deal said the inflows are expected next week.

Sri Lanka priced a $1 billion, five-year sovereign bond at par to yield 6 percent, coming inside initial talk of 6.25 percent area and at the tight end of final guidance of 6-6.125 percent.

Revealing its financial and monetary policies for 2014, the central bank said on Thursday it expects the rupee to strengthen in the medium term and its direct intervention in foreign exchange market would be minimum.

The local currency has gained about 3.4 percent since it hit a record low of 135.20 on Aug. 28. It lost 2.5 percent in 2013.

At 0513 GMT, Sri Lanka’s main stock index was up 0.25 percent, or 14.73 points, at 5,959.72. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

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