Sri Lankan rupee forwards ended weaker for a third straight session on Tuesday on dollar demand from importers as lower interest rates and depreciation in some foreign currencies versus the rupee paved the way for more imports, dealers said. Exporters, however, were waiting for clarity on economic policy from President Maithripala Sirisena's new government ahead of a scheduled interim budget on January 29, they said.
Four-day forwards, which were actively traded, closed lower at 132.75/85 per dollar, compared with Monday's close of 132.51/60. "There was importer (dollar) demand and the exporters were reluctant to convert," said a currency dealer. Dealers said the recent depreciation in Japanese Yen , Euro and lower interest rates have encouraged more imports. Dealers expect the rupee currency to be steady or move downward with little volatility until March before seasonal imports pick up.
Sirisena, who announced an interim cabinet on January 12, said he would carry out reforms to fight corruption in the 100 days to a parliamentary election. The market is expecting a flexible exchange rate with more foreign grants under the new government as opposed to controlled exchange rate regime earlier.