COLOMBO: Sri Lankan rupee forwards ended weaker for a second session on Tuesday on importer dollar demand, but moral suasion prevented a sharper fall as the market waited for cues on interest rates a day ahead of the central bank's monetary policy announcement.
Actively-traded two-week rupee forwards ended at 134.00/134.10 per dollar compared to Monday's close of 133.85/95, dealers said.
Dealers said the central bank prevented trades in two-week forwards above 134.00, which forced traders to trade in one-month forwards. The one-month forward ended at 134.40/50 per dollar, down from Monday's close of 134.30/40.
The central bank also prevented a fall in the spot rupee and one-week forwards amid importer dollar demand, while exporters looked for cues from market interest rates, which have been rising due to sustained government borrowing.
Sri Lanka's central bank is expected to keep its policy interest rates unchanged at record lows on Wednesday, a Reuters poll showed, after authorities early this month tightened monetary policy by scrapping a lower repo rate paid to banks.
One-week forwards were steady at 133.60/75 per dollar, while the spot currency was steady for the 15th straight session at 132.90/133.20, within the limits set by the central bank.
Central bank officials were not available for comment.
Sri Lanka's new government has borrowed around $1.2 billion since March 9, a move that economists blamed on poor revenue and higher expenditure.
When rates become attractive, exporters convert dollars into rupees, easing pressure on the local currency, dealers said, adding the market was closely monitoring interest rates.
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