COLOMBO: The Sri Lanka rupee ended slightly weaker on Thursday as importer dollar demand outpaced greenback sales by banks, despite the central bank's moral suasion to prevent a fall in the local currency, dealers said.
The local currency is under pressure as imports continue to rise in a stable exchange rate regime and low interest-rate environment, said traders.
The spot currency ended at 130.95/131.05 per dollar, weaker from Wednesday's close of 130.90/131.10. Dealers said banks traded the spot at 130.95 after the central bank revised down its level defended through moral suasion from 130.90.
Three-day forwards, or spot next, also capped at 131.00, were traded at 131.00/12 per dollar compared with Wednesday's close of 131.00/10.
Dealers said the central bank's capping of the spot next at 131.00 forced banks to trade in four-day forwards, which ended at 131.10/12 per dollar, little-changed from Wednesday's close of 131.10/16.
The market expects the local currency to remain weak due to rising seasonal imports, at least through November and only start to inch up in December on remittances, dealers said.
Overseas investors sold a net 39.12 billion rupees ($299 million) worth of government securities in the seven weeks through Nov. 5, data from the central bank showed.
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