The Sri Lankan rupee ended firmer for a fourth straight session on Wednesday as greenback sales by exporters and banks outpaced importer dollar demand, dealers said. Rupee forwards were active with two-week forwards ending slightly firmer at 151.70/80 per dollar, compared with Tuesday's close of 151.80/152.00.
Spot rupee ended steady at 151.25/40 per dollar. Foreign investors sold a net 15.37 billion rupees ($101.62 million) in the week ended February 22, extending the outflow from government securities to 64.5 billion rupees. The rupee has weakened 1 percent so far this year. It fell 3.9 percent last year, following a 10 percent drop in 2015.
"There was some (dollars) selling from a state bank time-to-time. I don't think it is the intervention. They must have sold their positions," said a currency dealer, who requested not to be identified. "There were no (foreign) bond sellers in the past few days, that is the main reason for the currency to stay at these levels." Dealers added that exports could be hurt as severe drought has affected the production of tea and other commodities.
"The rupee will be under pressure with higher oil imports due to drought," the currency dealer said. The rupee is under pressure due to dollar demand from importers ahead of the traditional Sinhala-Tamil New Year in mid-April, and as foreign investors continue to sell government securities, dealers stated.
Sri Lanka's fuel imports in January jumped to double typical monthly levels, with the country rushing to plug an energy shortfall as severe drought hits its hydropower output, industry sources said. Sri Lanka could face balance-of-payments pressure due to foreign outflows from government securities, a government document showed last week, even as the island nation was in the process of raising up to $2.5 billion from foreign borrowing.