Sri Lanka rupee forwards eased on Wednesday due to dollar demand from importers, while exporters stayed on the sidelines a day ahead of a presidential election which is expected to be tight, dealers said. Four-day forwards, which were actively traded, ended at 132.75/85 per dollar compared with Tuesday's close of 132.45/50, dealers said.
"There was importer dollar demand and the weak rupee is a clear reflection of global currencies," a dealer said adding that the market was waiting to see the outcome of Thursday's presidential poll and policy directions.
Since President Mahinda Rajapaksa called the early election, 26 members of parliament have quit his ruling United People's Freedom Alliance, including former health minister Mithripala Sirisena, who is challenging Rajapaksa's bid for a third term. Two opposition legislators have joined Rajapaksa.
Analysts see a tight race.
"If Rajapaksa gets re-elected, the fixed and controlled exchange rate regime will continue and there will be more borrowing," said a currency dealer.
"If the opposition comes, we may see a flexible exchange rate with more foreign grants coming into the country."
Rupee forwards were maintained around 132.00 in December as the central bank defended the currency through moral suasion. The spot was not traded on Wednesday.
Dealers said unusually high imports towards the end of 2014, amid lower interest rates and a stable exchange rate pressured the rupee. The spot currency remained between 130.00 and 131.75 rupees throughout 2014, with the central bank defending it at both ends to ensure a stable exchange rate. It fell 0.3 percent for the year, Thomson Reuters data showed.
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