COLOMBO: The Sri Lankan rupee traded steady on Wednesday as exporter dollar sales offset importer dollar demand amid greenback purchases by state banks.
Dealers said an increase in net open positions (NOP) by the central bank has helped to curb volatility.
The rupee was traded at 130.28/33 per dollar at 0720 GMT, little changed from Tuesday's close of 130.27/33.
"State banks are buying dollars with bids at 130.28 rupees. There was no (downward) pressure on the rupee after the central bank raised NOP with effect from yesterday," a dealer said.
An official at the central bank's International Operations Department said it has been buying excess dollars from the market after importers buy for their requirements.
The official said the central bank has absorbed around $25 million in the last few days and the monetary authority has bought around $575 million from the market so far this year to curb excess volatility.
Some dealers expect the rupee to face downward pressure due to continued imports and the possible fallout from the government spokesman saying the country had imported Iranian crude via third parties.
Currency dealers said it was too early to speculate on the implications of the country breaching U.S. sanctions.
Sri Lanka's main stock index was up 0.87 percent, or 55.27 points, at 6,431.28 at 0731 GMT, its highest since June 6, 2013.
Stockbrokers said foreign buying in conglomerate Hemas Holdings Plc helped boost sentiment, while offshore investors also bought shares in select banks and market heavyweight John Keells Holdings.
Turnover was 2.25 billion rupees ($17.3 million), with 163.5 million shares changing hands.
John Keells Holdings was up 1.7 percent by midday, while Hemas Holdings, which accounted for about 70 percent of the day's turnover, was 3.6 percent firmer.
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