Sri Lanka rupee forwards ended steady on Monday in dull trade as the market awaited direction after Maithripala Sirisena won the presidential election. Former President Mahinda Rajapaksa lost his bid for a third term on Friday, ending a decade of rule that critics say had become increasingly authoritarian and marred by nepotism and corruption.
Four-day forwards, which were actively traded, ended unchanged at 132.75/85 per dollar, dealers said. They said investors were concerned because the Sirisena administration has said it will do an audit on macroeconomic numbers and reveal any manipulation during the Rajapaksa regime.
The market is expecting a flexible exchange rate with more foreign grants under Sirisena's rule as opposed to the fixed and controlled exchange rate regime and more foreign borrowing under the previous government. 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 Monday. 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.
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