COLOMBO: The Sri Lanka rupee fell on Monday due to importer dollar demand, and dealers said the currency could face some downward pressure in the future on a possible pickup in imports.
Dealers, however, said they did not see any impact on the rupee due to $307 million in outflows from government securities a week earlier.
The rupee was traded at 130.30/33 per dollar at 0838 GMT, weaker from Friday's close of 130.28/30. Early last week, the rupee had closed at its highest in more than a year.
Offshore investors sold 40 billion rupees ($307 million) worth of Sri Lankan government securities last week, official data showed on Monday, but the central bank said this would not affect the rupee.
A currency dealer at a foreign bank, which usually deals with foreign trading in government securities, said the country could also see similar amount of inflows in the near future. He did not elaborate.
"There was some (import) demand, and we have seen some pickup in imports," said a currency dealer asking not to be named.
An official at the central bank's International Operations Department said the central bank did not pump any dollars to accommodate the outflows and foreign investors would have found dollars from the market.
The central bank has said the rupee would have appreciated to around 125 rupees per dollar had it not intervened by absorbing $750 million from the domestic foreign exchange market this year through July 14.
Dealers had been expecting the rupee to appreciate due to lack of strong growth in imports and private sector credit, despite lower interest rates.
Yields in treasury bills edged down further at a weekly auction on Wednesday.
The central bank kept policy rates steady at multi-year lows for a sixth straight month last week, as expected, despite private sector credit growth slowing to a 4-1/2-year low. .
Sri Lanka's trade deficit narrowed by 47.9 percent to $393.4 million in May from $754.9 million a year earlier, mainly due to lower imports, central bank data showed.
Sri Lanka's main stock index was up 0.5 percent, or 33.36 points, to 6,755.56 at 0846 GMT, hovering near its 33 month-high hit on Wednesday. Turnover was 800.6 million rupees ($6.15 million) with 32.6 million shares changing hands.
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