"There was some importer demand. We have seen some sizable demand today, even some state banks bought dollars after the weekend," said a currency dealer. But dealers said the positive news about the Generalised System of Preferences Plus helped the rupee. The Sri Lankan government said in a statement on Thursday that the Council of Ministers of the European Union had approved the country's GSP Plus application and the official notification on its entry will be finalised next week.
Finance Minister Ravi Karunanayake said on Sunday revenue rose 17 percent in the first quarter compared with a year ago, surpassing the government's expectations, due to higher tax collection. Central Bank Governor Indrajit Coomaraswamy said on Tuesday that the monetary authority did not want to allow the rupee to fall "too quickly", but suggested further weakness in the exchange rate is on the cards as policymakers sought a competitive currency.
The downward adjustment on the spot currency was to make the rupee more competitive, he added. The monetary authority on Tuesday kept the policy rates steady as expected, saying inflation was expected to decelerate to mid-single digit levels by end-2017. Sri Lanka drew a blowout response in its return to the international bond market, attracting orders of more than $11 billion from 500 accounts for a $1.5 billion 10-year bond.
Copyright Reuters, 2017