COLOMBO: The Sri Lankan rupee edged down on Tuesday due to importer dollar demand, but currency dealers said foreign inflows into government securities could boost the currency in the near term.
The rupee closed at 126.50/60 to the dollar from Friday's close of 126.25/26, traders said. Both stock and foreign exchange markets were closed for a public holiday on Monday.
"We still see foreign inflows into T-bonds and bills," a currency dealer said on condition of anonymity. "We might have a problem in the exchange rate if foreign investors start to withdraw massive amounts in short period."
The local currency rose to a nine-month high on Thursday due to foreign inflows into government securities despite the central bank buying dollars to prevent a rapid appreciation.
The government's debt office has said Sri Lanka could accommodate up to 60 billion rupees foreign investment in T-bonds and bills this year.
Sri Lankan stocks edged up with the main share index closing 0.07 percent, or 3.75 points, up at 5,750.24.
Foreign investors were net buyers of 190.6 million rupees ($1.51 million) worth shares.
The island nation saw a record net foreign buying of 38.63 billion rupees worth of shares last year.
Turnover was 727.6 million rupees.
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