While there has been demand for US dollars in recent days as foreigners sold stocks in the Colombo bourse and bonds, the dollar appears to be stabilizing in the money markets here, dealers said
The dollar was trading at around 155.20/155.40 rupees (per dollar) on Wednesday.
Dealers gave mixed signals on the reasons for the appreciating US currency. Some said it was due to political uncertainty while others said it was due to demand unconnected to political developments. However Wednesday’s announcement in parliament that the national government will continue is likely to settle the market.
The volatility was somewhat 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.
Another dealer, who believed the movement of the dollar was connected to the political uncertainty said the pressure on the rupee was partly 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. (Feizal)
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