COLOMBO: The Sri Lankan rupee traded steady on Monday in dull trade as exporter dollar sales and inward remittances offset importer demand for the greenback, but dealers said the currency is under upward pressure because of inflows in the absence of strong growth in private credit and imports.
The rupee was traded at 130.21/24 per dollar, unchanged from Friday's close, at 0625 GMT.
"The pressure is there to appreciate," a currency dealer said. Dealers said the two state banks bought dollars at 130.21 rupees for imports amid inflows from remittances and exporter dollar sales.
Dealers said the central bank's dollar buying from the market has increased rupee liquidity and sent yields on government securities lower amid lack of strong demand for private credit and imports.
The central bank has absorbed more than $750 million from the market to prevent a sharp appreciation in the rupee and support exporters.
The International Monetary Fund (IMF) on Wednesday urged Sri Lanka to limit its intervention in the foreign exchange market.
The IMF said the central bank's intervention may create a perception that the rupee was implicitly fixed and could lead market participants and firms to hold un-hedged foreign exchange risk on their balance sheets.
Finance Secretary P.B. Jayasundera on July 23 said Sri Lanka was building up its foreign exchange reserves while keeping its currency stable as the island-nation sees more dollar inflows. Sri Lanka's main stock index was up 0.28 percent, or 19.09 points, at 6,829.22 at 0645 GMT, hovering around its highest level since September 2011.
Turnover was 1.81 billion rupees ($13.90 million) with 90.3 million shares changing hands.
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