COLOMBO: The Sri Lankan rupee traded flat on Thursday as exporter dollar sales offset importer demand, a day after the treasury secretary said the rupee was maintained steady while the country builds up its foreign exchange reserves.
The rupee was traded at 130.24/26 per dollar at 0723 GMT, the same as its previous close, which was also the highest close since July 18.
"There was not much of pressure on either side," said a currency dealer.
Finance Secretary P.B. Jayasundera said late on Wednesday that Sri Lanka was building up its foreign exchange reserves while keeping its currency stable as the island nation sees more dollar inflows.
Speaking at a Foreign Correspondents' Association forum, Jayasundera said the choice was to let the exchange rate appreciate and enjoy the short-term gain or let the exchange rate remain flexible within a reasonable level.
"Technically speaking you have the luxury to allow the exchange rate to appreciate. We don't want that to happen," said Jayasundera, the top technocrat in President Mahinda Rajapaksa's government.
The central bank has absorbed more than $750 million so far this year, which Jayasundera attributed to a rise in inflows from exports, tourism and remittances.
Dealers had been expecting the rupee to appreciate due to weak growth in imports and private sector credit, despite multi-year low interest rates.
Private sector credit growth hit a more than 4-1/2 year low of 2.2 percent in May on the year, compared with 3.3 percent a month earlier. May imports fell 17.6 percent year on year to $1.28 billion.
Jayasundera said the lack of credit demand was due to many sectors having become "cash rich", with increasing import substitution having curtailed imports.
Sri Lanka's main stock index was up 0.07 percent, or 4.82 points, to 6,788.80 at 0730 GMT, hovering around a 34 month-high. Turnover was 508.8 3 million rupees ($3.9 million)with 22.8 million shares changing hands.
Comments
Comments are closed for this article.