The Sri Lankan rupee ended slightly firmer on Thursday as a state bank sold dollars amid moral suasion by the central bank after the local currency fell on importer greenback demand, dealers said. Rupee forwards were active, with two-week forwards ending at 152.20/30 per dollar after it traded at 152.35 in intra-day trade. It closed at 152.35/50 on Wednesday.
"There was heavy moral suasion today. Some trades which traded above 152.35 were not allowed to take place," said a currency dealer on condition of anonymity. "The central bank was not giving an indication of a level, but they were saying the rates quoted were high."
Foreign investors bought a net 701 million rupees ($4.64 million) worth of government securities in the week ended March 1, recording the first weekly net inflow for the year. They have sold a net 63.76 billion rupees of such instruments so far this year.
Dealers said one of the state banks, which is generally used by the central bank to direct the market, sold dollars up to 152.10 per dollar from 152.25, and eased the pressure on the currency. Central bank officials were not available for comment. International Monetary Fund on Wednesday urged the country's central bank to rebuild foreign reserves while maintaining exchange rate flexibility.
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