COLOMBO: The Sri Lankan rupee closed firmer on Tuesday on exporter dollar conversions in the absence of importer demand for the greenback, while a rise in the currencies of the island nation's main trading partners also aided, dealers said.
The Indian rupee led gains in emerging Asian currencies as investors hoped that further data from China would add to evidence that the world's second-largest economy is stabilising.
The rupee spot next, which was active in the market in the absence of spot trade, was firmer at 132.85/95 per dollar, compared with Monday's close of 133.05/15.
"The rupee has strengthened and the pressure is easing with the US treasury yields dropping. But it needs to have a close watch with the global uncertainties," a currency dealer said, referring to a Fed meeting next week and the possible US strike on Syria.
The rupee hit a record low of 135.20 to the dollar on Aug. 28, before recovering slightly.
The rupee has been falling since early July with foreign investors pulling out of Sri Lankan treasury bonds as US treasury yields rose on expectations the Federal Reserve would soon begin to taper its big bond buying programme.
The central bank's latest data showed foreign holdings in government securities fell 2.2 percent to 482.4 billion rupees ($3.63 billion) in the week ended on Sept. 4, after falling 2 percent in the previous week.
However, Central Bank Governor Ajith Nivard Cabraal said last week foreign holdings in government securities are still well above the threshold of 12.5 percent of the total outstanding T-bills and T-bonds.
The rupee has fallen nearly 4 percent this year, after depreciating around 10 percent in 2012.
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