Rupee remains steady

Economic downturnThe Sri Lankan rupee was little changed on Friday as dollar demand by importers offset selling of the US currency by foreign banks, even as dealers expect the rupee to rise following $1.5 billion in inflows from a sovereign bond issue.

Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds on Monday, although at a lower borrowing cost than initially expected, as yield-hungry global investors put in over $5.5 billion in offers.

Earlier this week, Finance Minister Ravi Karunanayake said the rupee would “obviously appreciate” on inflows from the sovereign bond issue.

Sri Lankan rupee one-week forwards SLKR, which have been acting as a proxy for the spot rupee, were at 146.15/40 per dollar, little changed from Thursday’s close of 146.15/30.

“The importer demand (for dollars) is there today,” said a currency dealer, asking not to be named.

The spot rupee was not quoted, but the spot-next, which are rupee forwards settled three days after the spot rupee settlement, were steady at 146.00/15 per dollar, compared with Thursday’s close, dealers said.

The spot rupee LKR=LK is tightly managed by the central bank and market participants use the forward market levels for guidance on the currency.

The Sri Lankan stock index (CSE) was up 0.03 per cent at 6,403.66, on a turnover of 201.4 million rupees ($1.38 million).

In spite of volatility sparkled by Britain’s decision to exit the European Union (Brexit), Sri Lanka has announced that it had secured $1.5 billion through a bond issue which was almost four times oversubscribed.

The Central Bank of Sri Lanka said orders aggregated $5.5 billion for the $1.5 billion bond issue. The country offered $500 million in bonds with a tenure of 5.5 years and $1 billion for a 10-year period.

The bank said the shorter term debt was priced slightly less than 6.125% while the longer tenure was at 7.125% and the rate was well within its anticipated interest rate.

It added, “Despite the high volatility in the global financial markets following the historic United Kingdom referendum in June regarding their membership of the European Union, the bonds saw strong interests from a wide range of high quality investors.”

Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds on Monday, although at a lower borrowing cost than initially expected, as yield-hungry global investors put in over $5.5 billion in offers. Earlier this week, Finance Minister Ravi Karunanayake said the rupee would “obviously appreciate” on inflows from the sovereign bond issue. (Reuters)

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