COLOMBO: Sri Lanka's rupee was a tad weaker on Thursday due to dollar demand from importers as the local currency stayed under pressure in the absence of strong dollar inflows, dealers said.
However, the central bank expected the currency to stabilise due to $209 million in inflow raised through Sri Lanka Development Bonds from a number of Middle East banks.
The rupee spot next or one-day forward, which was active in the absence of spot trade, traded at 133.08/15 per dollar at 0609 GMT, compared with Wednesday's close of 133.05/15.
Central Bank Governor Ajith Nivard Cabraal said there was no volatility in the rupee exchange rate for the last one week.
"We have raised $209 million through Sri Lanka Development Bonds from some Middle East banks. The inflow will help stabilise the currency," Cabraal told Reuters.
Currency dealers said the inflow helped to ease the downward pressure on the rupee, but the currency cannot be defended continuously in such a manner.
"What we need to stabilise the rupee is more export revenue and inward remittances. Until that happens, the central bank can intervene through borrowed funds, but you can't sustain that kind of stability," a currency dealer said on condition of anonymity.
The currency hit a record low of 135.20 per dollar last week amid panic buying by importers, but it has recovered since then.
Spot rupee was quoted at 133.00 in early trade, Thomson Reuters data showed.
Since early July, the rupee has fallen as some foreign investors pulled out of Sri Lanka's treasury bonds on expectations the US Federal Reserve will soon taper its bond buying programme.
The central bank's latest data showed foreign holdings in government securities fell 2 percent to 493.36 billion rupees in the week ended Aug. 28.
The rupee has fallen nearly 4 percent this year, after depreciating around 10 percent in 2012.
Sri Lanka's main stock index was 0.19 percent or 10.71 points weaker at 5,734.18 by 0614 GMT.
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