Rupee down; Stocks flat

COLOMBO, (Reuters) - Sri Lanka’s rupee edged down on Tuesday as a bank bought dollars for importers while discussions on a proposed $1.9 billion International MonetaryFund (IMF) loan kept investors in limbo.
The bourse ended flat while investors looked for some direction.
The rupee closed down at 114.05/15 per dollar, down from Monday’s 113.95/114.05. On Feb. 27 it hit an all-time low of 115.75/95 before the central bank intervened to keep it steady.
“There was some importer demand from a foreign bank,” said a currency dealer. “One state bank, which usually represents the central bank, sold dollars at 114.10.”
Dealers and traders said the market is waiting to see the terms and conditions of the IMF loan, which are expected to give direction to the rupee’s movement.
Sri Lanka’s central bank has said it will allow more flexibility in the rupee exchange rate after the loan comes through.
An IMF team is in town finalising the terms of the $1.9 billion loan.
The rupee has fallen 5.35 percent since Oct. 30, after the central bank allowed depreciation to preserve dollars and enhance exporter competitiveness. It is down 0.96 percent so far in 2009.
The Colombo All-Share index barely changed to 0.15 percent or 6.10 points down to 1625.48.
“It was a dull market except for a block deal trading,” said Shivantha Meepage, a research analyst at Acuity Stockbrokers. “Investors expect some favourable economic conditions including low interest rates to start investing, after the IMF loan.”
Analysts said the IMF loan also could boost investor sentiments as some foreign investors are concerned on Sri Lanka’s low reserves and over-valued currency.
Sri Lanka’s gross foreign official reserves have fallen to $1.4 billion by end-January, sufficient to finance only 1.3 months of imports, the central bank said last week.
The interbank lending rate or call money rate edged down to 11.291 percent from Monday’s 11.326 per cent.