Rupee ends steady after paring early gains

REUTERS: The Sri Lankan rupee ended steady yesterday, erasing gains from earlier in the day on investor concerns that the currency would fall after the Central Bank set a target for buying dollars directly from the market in a bid to boost reserves.
Rupee forwards were active, with spot-next forwards closing steady at 152.85/90 per dollar. One-week forwards also were steady at the close of trade, at 152.95/153.00 per dollar.
Sri Lanka’s Central Bank is targeting US$1.2 billion in direct market purchases of dollars to boost the island nation’s reserves this year, said Indrajit Coomaraswamy, the monetary authority’s chief yesterday.
That comes after Sri Lanka missed its end-December reserves target agreed with the International Monetary Fund (IMF) for a US$1.5 billion, 36-month loan.
“The move will definitely put pressure on the rupee at a time when the central bank is not defending it and the market is determining the exchange rate,” a currency dealer said asking not to be named.
The spot rupee did not trade yesterday.
The Central Bank fixed the spot rupee reference rate at 152.50 on May 5.
The Central Bank has allowed the currency to gradually depreciate since mid-December, revising its spot reference rate multiple times.