COLOMBO: The Sri Lankan rupee gained against the dollar on Friday after the central bank resumed open market operations (OMOs) in the previous session.
The Central Bank of Sri Lanka had suspended OMOs along with its last month monetary policy announcement on Sept. 23, to push banks cut lending rates and boost private sector credit.
The spot currency was traded at 130.35/40 per dollar at 0630 GMT compared with Thursday's close of 130.30/50. It had closed at 130.80 on Tuesday.
"The central bank's action has given some stability to the market. It eradicated the ambiguity created following the monetary policy statement," said a currency dealer asking not to be named.
Two other dealers said the downward pressure seems to have eased after the central bank started OMOs.
The spot rupee was not quoted in early trade on Thursday for a second straight session after the central bank limited the spot currency range to between 130.40 and 130.50, to prevent any sharp fall amid heavy equity selling and pullback by foreign investors from government securities.
The rupee had come under pressure after foreign funds sold stocks worth 4.4 billion rupees ($33.7 million) in the three sessions through Tuesday.
Currency dealers expect the rupee to weaken further on the back of sustained selling by foreign investors in government securities, which are already at multi-year lows, and rising imports in a low interest rate environment.
Dealers said concerns over lower returns following the central bank's decision to limit bank deposits under its repo window have prompted some foreign investors to gradually pare stakes in government securities.
Sri Lanka's stock index had risen 0.84 percent, or 61.60 points, to 7,412.65 by 0638 GMT.
Turnover was 1.42 billion rupees ($10.9 million), with 66.7 million shares changing hands.
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