COLOMBO: The Sri Lankan rupee traded firmer on Thursday as dollar sales by exporters and banks outpaced importer demand for the greenback, with the market expecting the rupee to strengthen in the near future.
Some dealers said investor sentiment on the currency was positive because of expected inflows from a $1 billion sovereign bond issue either on Thursday or Friday.
The spot rupee was at 130.65/70 per dollar at 0534 GMT, firmer from Monday's close of 130.68/73. Both currency and stock markets were closed on Tuesday and Wednesday for public holidays.
"There were some import bills that got covered without any issue.
We have seen some exporter and banks dollar sales," said a dealer.
The rupee is likely to appreciate in the near term due to inflows from the bond issue, dealers said. However, gains would depend on whether the central bank wants to buy the inflows to build up its reserves or increase dollar liquidity in the market.
The central bank said on Jan. 2 it expected the rupee to strengthen in the medium term and any direct intervention in the foreign exchange market would be minimum.
The rupee has gained about 3.5 percent since it hit a record low of 135.20 on Aug. 28. It lost 2.5 percent in 2013.
At 0539 GMT, Sri Lanka's main stock index was up 0.45 percent or 27.52 points at 6,143.91, its highest since Aug. 21.
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