COLOMBO: The Sri Lankan rupee ended steady near a one-year high on Tuesday as dollar sales by banks and exporters were offset by mild importer demand, while two state banks bought the greenback to prevent any sharp gains in the local currency.
The rupee ended unchanged at 130.26/28 per dollar, its highest since June 28, 2013.
The two state banks, through which the central bank intervenes to direct the market, bought dollars at 130.26 rupees as the central bank allowed a gradual appreciation in the local currency to prevent shocks, dealers said.
The central bank had bought dollars at 130.35 rupees on May 30 and started lowering its buying rate since then, allowing a gradual appreciation.
Central bank Governor Ajith Nivard Cabraal told Reuters on Friday that the rupee was facing some appreciation pressure and the bank was allowing the trend on a gradual basis to let all stakeholders adjust to the changes, without any shocks.
He had said earlier that the central bank would keep intervening in the currency market to prevent a rapid rise in the rupee. The central bank had absorbed over $400 million as of May 27 this year to prevent a sharp gain.
Dealers said the central bank intervention has prevented gains in the currency and they expect it to face upward pressure until credit growth and imports pick up.
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