COLOMBO: The Sri Lankan rupee was slightly weaker on Monday due to mild importer dollar demand in thin trade, with the market awaiting cues about the direction of interest rates, dealers said.
Actively traded two-week rupee forwards stood at 133.90/134.00 per dollar at 0652 GMT compared to Friday's close of 133.80/90.
"It's a dull day. There is a mild importer (dollar) demand," said a currency dealer asking not to be named.
The central bank, however, prevented a fall in the spot rupee and one-week forwards at 132.90/133.20 and 133.60/75, respectively, within the limits set by it.
Central bank officials were not available for comment.
Dealers said the market was awaiting cue on the direction on interest rates after yields on t-bills fell between 31 and 44 basis points at a weekly auction on Wednesday, after having spiked to 112-124 basis points the two previous weekly auctions.
They said a probe into all bond auctions since 2012 is also hurting sentiment.
Sri Lanka has launched a probe into allegations of corruption in government bond sales held by the central bank since 2012, the prime minister said on Tuesday, after opposition parties called for an independent investigation into a February bond auction.
The main stock index was 0.06 percent lower at 7,050.43 at 0656 GMT, near a six-week low. Turnover was 161.1 million rupees ($1.21 million).
Stockbrokers expect the market to be in the red until the political situation stabilises even after Sri Lankan President Maithripala Sirisena formed a national government on Sunday.
"The market could be weaker despite political stability after the national government, which only focuses on electoral and constitutional reforms," a stockbroker said on condition of anonymity.
"But there could be more political uncertainty because of concerns that the current government's good governance and anti-corruption stance would not be a reality under a national government."
Sirisena, incorporating the main opposition party, has formed a national government in a bid to push through reforms and preserve political stability.
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