COLOMBO: The Sri Lankan rupee ended weaker on Friday on importer dollar demand, but the market expects the local currency to strengthen in the near future due to inflows from a sovereign bond sale.
Dealers said investors were awaiting to see the impact of the expected inflows from a $1 billion sovereign bond issue.
The spot rupee ended at 130.73/75 per dollar, weaker from Thursday's close of 130.60/67.
"A state bank bought dollars. It was not intervention, but genuine importer demand. If not for the state bank's bid, rupee would have strengthened," said a dealer.
The rupee is likely to appreciate after the bond issue, dealers said. However, gains would depend on whether the central bank wants to buy the inflows to build up its reserves or increase dollar liquidity in the market.
The central bank said on Jan. 2 it expected the rupee to strengthen in the medium term and any direct intervention in the foreign exchange market would be minimum.
The rupee has gained about 3.4 percent since it hit a record low of 135.20 on Aug. 28. It lost 2.5 percent in 2013.
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