COLOMBO: The Sri Lankan rupee fell on Wednesday due to heavy dollar demand from banks to facilitate selling in shares by a U.S.-based fund, but dealers said moral suasion by the central bank capped the depreciation.
The rupee ended at 130.19/23 per dollar after declining to 130.22 earlier in the day. It had closed at 130.13/14 on Tuesday.
U.S.-based fund Janus sold shares in conglomerate John Keells Holdings Plc, resulting in a net foreign outflows of 4.52 billion rupees ($34.7 million) on Tuesday, the worst net foreign selling on the Colombo bourse since March 25, 2010.
"Rupee is weaker, but the central bank's moral suasion prevented heavy depreciation," said a currency dealer asking not to be named.
Three other dealers confirmed the central bank's move but an official at the central bank international operations department told Reuters that there was no moral suasion.
"No moral suasion, state banks purchased for their requirement," the official said.
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