COLOMBO: The Sri Lankan rupee was steady in dull trade on Tuesday after the central bank kept its key policy rate unchanged as expected.
Dealers said they expected the currency to remain steady in the near future due to sluggish credit demand.
The spot rupee was traded at 130.60/63 per dollar at 0555 GMT, little changed from Monday's close of 130.60/62.
Before market open on Tuesday, the central bank kept policy rates steady at multi-year lows, as expected, and expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion.
"The rupee will remain at these levels until we see growth in private sector borrowing. We haven't seen that happening yet," said a currency dealer asking not to be named.
Private sector credit grew 4.4 percent year-on-year in February, the slowest expansion since May 2010, the central bank's latest data showed.
That compared with a growth of 5.2 percent in January this year and 13.3 percent in February 2013.
Dealers said the market was awaiting some direction from the weekly treasury bill auction, due Wednesday, to see if the central bank would allow yields on T-bills to ease further.
Dealers expect the rupee to trade in a range of 130.60-70 in the near future.
It has been hovering between 130.55 and 130.70 per dollar since March 3, Thomson Reuters data showed.
Dealers say the central bank had intervened through two state banks to defend the rupee against sharp swings.
There has been a gradual increase since mid-March in remittances by Sri Lankan expatriates to their relatives, while dollar selling has also increased as exporters paid bonuses to their employees.
Those inflows have helped ease depreciation pressure, which was seen in the early part of the year.
Sri Lanka's main stock index was up 0.25 percent, or 15.73 points, at 6,202.76 as of 0601 GMT, its highest intra-day peak since Feb. 5.
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