US $ seen stabilising in Colombo markets
View(s):The US dollar which rose to a high of Rs.157 earlier this week on speculative trading due to political uncertainty in Sri Lanka stabilised to Rs. 155.25/Rs. 155.40 levels on Friday.
Some money market dealers said they believed the Central Bank (CB) pumped in dollars into the market to stem the demand and calm the markets. CB officials declined to comment on market movements. “I think it will settle down next week by which time a new cabinet would have been appointed,” one dealer said.
The dollar was seen rising due to political uncertainty with the volatility attributed to foreigners taking out their funds from dividend payments from listed Colombo companies while rising US interest rates was also attributed to an outflow of foreign currency. “When US interest rates rise, US fund managers who park their funds in other countries bring it back to the US,” one dealer said.
Pressure on the rupee was also due to exporters holding onto their cash overseas in anticipation of a further rupee depreciation while at the other end, importers were booking dollars fearing it would rise further.