COLOMBO: The Sri Lankan rupee ended weaker on Thursday due to importer dollar demand, even as dealers turned cautious on the currency's outlook after the country's central bank limited commercial banks' access to the standing deposit facility or the repo window.
The spot currency ended at 130.35/40 per dollar, weaker from Wednesday's close of 130.32/35.
Dealers said they expect the rupee premiums or forward trade to also ease due to possible foreign outflows from government securities after the central bank's decision, a move that market participants said amounted to an effective rate cut.
"There is importer (dollar) demand and less selling as dealers are waiting to see whether foreign bondholders will pull out after the central bank's effective rate cut," a currency dealer said.
On Tuesday, the central bank announced measures to make commercial banks lower their lending rates to support an economy expected to grow 7.8 percent this year.
Central Bank Governor Ajith Nivard Cabraal said on Wednesday the monetary authority expects the "rupee to be stable in the coming months".
The 364-day t-bill yield fell 37 basis points at a weekly auction on Wednesday.
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