COLOMBO: The Sri Lankan rupee traded steady on Monday in light business as importer demand for dollars absorbed exporter dollar inflows, but dealers expect the currency to face upward pressure due to steady inflows amid slack demand for imports and credit.
The rupee traded steady at 130.40/45 per dollar at 0634 GMT.
Central bank Governor Ajith Nivard Cabraal told Reuters on Friday the currency was performing as the bank expected, and there was no pressure to appreciate or depreciate.
Dealers say the central bank had been preventing the rupee's appreciation over the last few weeks with steady inflows amid lower demand for private sector credit and imports.
While maintaining the policy rate for the fourth straight month on Tuesday, Sri Lanka's central bank said it expected to introduce a new guarantee scheme for gold loans to boost credit growth that fell to a four-year low in March.
Despite a multi-year low interest rates, data on Monday showed private sector credit grew at a four-year low of 4.3 percent in March from a year earlier, while imports in February fell 6.2 percent on the year.
Dealers expect the rupee to face upward pressure until credit growth and imports reverse the trend.
Cabraal said on May 19 private sector credit growth would pick up to around 15 percent by end-2014 and continue to improve through 2016. Sri Lanka's main stock index was up 0.17 percent, or 10.47 points, at 6,290.78 points at 0638 GMT. The turnover was 172.8 million rupees ($1.33 million), with 11.9 million shares changing hands.
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