COLOMBO: The Sri Lankan rupee fell on Monday due to importer dollar demand mainly from state banks, while dealers said banks hesitated to trade the currency beyond 130.35 after the central bank curbed them through moral suasion last week.
The rupee was traded at 130.33/35 per dollar at 0612 GMT, weaker from Friday's close of 130.30/35.
It hit a more than three-week closing low of 130.34/38 on Wednesday.
"There is demand for dollars from state banks. We haven't seen any moral suasion so far like last week," a currency dealer said, asking not to be named.
Other dealers said banks were not willing to trade the rupee beyond 130.35 after the central bank defended the currency at that level last week. They also said volumes were thin as Monday was the last day of the second quarter.
Dealers expect the currency to trade in a range of 130.40 to 130.50 in the near future due to expected importer dollar demand, but hope it will bounce back on inflows.
Some dealers expect the rupee to face downward pressure due to continued imports and the fallout from the government spokesman saying the country had imported Iranian crude via third parties.
Currency dealers said it was too early to speculate on the implications of the country breaching US sanctions. However, it was a relief for the market that nothing had happened so far, they added. Sri Lanka's main stock index was almost flat at 6,363.04 at 0625 GMT. Turnover was 629.5 million rupees ($4.8 million), with 41.2 million shares changing hands.
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