COLOMBO: The Sri Lankan rupee traded firmer on Tuesday as exporter dollar sales outpaced thin greenback demand from importers, with dealers expecting upward pressure on the currency to continue due to steady inflows until demand for imports and credit pick up.
The rupee was traded at 130.37/40 per dollar at 0548 GMT, slightly higher from Monday's close of 130.38/42.
"Exporter dollar selling is there and there is not much of importer demand," said a currency dealer.
Central bank governor Ajith Nivard Cabraal told Reuters on Friday that the currency was performing as the bank expected, and there was no pressure to appreciate or depreciate. Dealers say the central bank had been preventing the rupee's appreciation over the last few weeks with steady inflows amid lower demand for private sector credit and imports. While maintaining the policy rate for the fourth straight month last week, Sri Lanka's central bank introduced a new guarantee scheme for gold loans to boost credit growth that fell to a four-year low in March.
Despite multi-year low interest rates, data last week showed private sector credit grew at a four-year low of 4.3 percent in March from a year earlier. It hit a record 35.2 percent in March 2012.
The latest trade data on Monday showed imports have gained 8.2 percent in March, while exports hit a record high of $1.07 billion, helping to narrow the March trade deficit by 15.5 percent compared to a year ago.
Dealers expect the rupee to face upward pressure until credit growth and imports pick up. Cabraal said on May 19 that private sector credit growth would pick up to around 15 percent by end-2014 and continue to improve through 2016. Sri Lanka's main stock index was down 0.11 percent, or 6.82 points, at 6,286.20 points at 0602 GMT.
Turnover stood at 1.06 billion rupees
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