COLOMBO: The Sri Lankan rupee ended steady on Monday, a day ahead of a monetary policy decision by the central bank, as late importer demand for the dollar currency offset inflows from remittances.
Dealers expect the Sri Lankan currency to rise, fed by steady inflows in the absence of strong demand for imports and credit.
The rupee ended at 130.35/40 per dollar, little changed from Friday's close of 130.37/40.
"There was importer demand for dollars later in the day and some trade was done at 130.38 rupees," a currency dealer said.
The central bank will release its monetary policy rates at 0200 GMT on Tuesday. The market broadly expects rates to be left steady at their current multi-year lows.
The central bank has been "giving effect to the present trend in a gradual manner," central bank Governor Ajith Nivard Cabraal told Reuters on May 9.
On Monday, Cabraal said Sri Lanka's private sector credit growth would pick up to around 15 percent by the end of this year and continue to improve through 2016.
Dealers said lack of credit growth and a contraction in imports could hit the economy unless the government propped up expansion through infrastructure funding.
Despite a multi-year low interest rate regime, data showed private sector credit grew 4.4 percent in February from a year earlier, the slowest expansion since May 2010, while imports in February fell 6.2 percent on the year.
Steady inflows from remittances and exporter conversions, amid lack of importer dollar demand, earlier led to the rupee's appreciation, dealers said. They expect the rupee to face upward pressure until credit growth and imports reverse their trends.
The currency has hovered between 130.55 and 130.70 from March 3 through May 8, Thomson Reuters data showed, with the central bank intervening to smoothen any sharp volatility.
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