New rupee options market starts trade

COLOMBO: Standard Chartered said it made Sri Lanka's first-ever rupee option trade as new Central Bank rules took effect on Friday, which analysts and the Central Bank Governor said would boost the island's import- and export-driven currency market.

The bank sold $500,000 worth of one-month rupee options at 108.75 rupees each. It said the client was Prima Ceylon.

"This is Sri Lanka's first rupee option deal," said Rukshan Dias, head of global markets at Standard Chartered. "Until now, importers and exporters have only had forward rates available. These options give them greater flexibility."

The rupee closed at 108.07/108.13 per dollar on Thursday. Central Bank Governor Ajith Nivard Cabraal said the new option market would help the island's financial markets develop.

"I think it will widen and deepen the market," Cabraal told Reuters. "We are thinking of introducing many innovative instruments. We are looking at the market being developed."

"The rupee we would expect after this holiday tension (seasonal import increase) is reduced, will stabilise itself," he added.

"Overall, imports have been fairly high, which has been reflected in the rupee."

Imports during the January-September period rose 17.4 percent to $7.617 billion dollars.