COLOMBO, July 2 (Reuters) - The Sri Lankan rupee
extended falls early on Tuesday to trade around its near
eight-month lows on importer demand for the greenback, with
concerns over further foreign outflow from government securities
also hurting the currency, dealers said.
The currency was quoted at 130.70/80 per dollar at 0505 GMT,
dealers said, a level last seen on Nov. 9, 2012.
It lost 0.15 percent on Monday, extending the year-to-date
decline to 2.33 percent.
The rupee fell 1.24 percent last week and 3.12 percent in
June, mainly as foreign investors pulled out of Sri Lankan
treasury bonds due to a rise in the U.S. treasury yields
following the Federal Reserve's plan to trim its stimulus
'An oil import bill of around $4 million put the pressure on
the rupee. We don't see foreign investors pulling out of bonds
aggressively,' a currency dealer said.
The central bank had not been selling dollars despite demand
for the greenback in the market, another dealer said.
The central bank, which usually intervenes in the market,
said last week it will maintain flexibility in the rupee
exchange rate despite the currency's weakening trend.
Some dealers said the currency would not depreciate sharply
as the central bank has mopped up the local currency in the
But the depreciation would discourage foreign investors from
selling the rupee-denominated bonds, they added.
Foreign investors, who hold a net $3.79 billion in Sri
Lankan government securities, have been exiting gradually,
central bank data showed on Friday, exerting pressure on the
Dollar assets have become a big lure for investors as the
Fed prepares to dial down its massive bond-buying programme,
triggering a huge selloff in emerging market bonds and
currencies in the past week.
Sri Lanka's main stock index was up 0.38 percent, or
23.57 points, at 6154.56 at 0530 GMT.
'We have seen on and off strategic foreign buying in thin
volume,' said a stock broker who declined to be named.
Stockbrokers said investors were concerned about the rupee's
fall amid a possible further pullout by offshore investors from
equities. The bourse saw a net foreign outflow of 1.03 billion
rupees ($7.90 million) last week.
However, on Monday, foreign investors were net buyers of
160.9 million rupees in shares, extending the year-to-date net
foreign inflow to 15.34 billion rupees.
Monday's turnover was 561.8 million rupees, well below this
year's daily average of around 1 billion.
($1 = 130.4000 Sri Lanka rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Jijo
Keywords: MARKETS SRILANKA/
(firstname.lastname@example.org)(+94-11-232-5540)(Reuters Messaging: email@example.com)(twitter.com/rangab a)
Copyright Thomson Reuters 2013. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.