The Sri Lankan rupee edged down on Wednesday as importer dollar demand outpaced greenback sales by banks and exporters, dealers said.

However, some dealers anticipate the rupee would appreciate due to expected dollar deposits from foreign investors.

The rupee was at 143.80/90 per dollar at 0624 GMT, slightly weaker from Tuesday’s close of 143.75/85.

An unidentified investor has promised to invest $1 billion in dollar deposits in Sri Lanka to help the island nation defend its currency, Finance Minister Ravi Karunanayake told Reuters, in an unusual move that highlights the country’s precarious finances.

“Today the demand (for dollars) is more. Everybody is expecting the said inflows,” said a currency dealer, requesting not to be named.
Karunanayake declined to reveal the investor’s identity, but said the individual was a Belgian working with a Sri Lankan partner.

The market also expects the depreciation pressure on the rupee to ease due to a rise in commercial banks’ statutory reserve ratio by 150 basis points from Jan. 16, in line with the central bank’s monetary policy announcement last month.

The yield in 91-day T-bills rose 19 basis points to a three-month high of 6.78 percent at the weekly auction on Tuesday.

Karunanayake on Friday said the government will look into an approach soon which should help ease the pressure on the rupee.

Sri Lanka’s main stock index was up 0.67 percent, or 43.53 points, at 6,577.88 at 0650 GMT, recovering from more than 18-month low hit in the previous session after for falling seven straight sessions. Turnover stood at 573.1 million rupees ($3.99 million). (Reuters)

-Agencies