COLOMBO: The Sri Lankan rupee was steady at its more than one-year high on Thursday as inflows from remittances and exporter dollar sales offset importer demand for the greenback.
Dollar buying by state banks, however, put the local currency under pressure.
The rupee was at 130.23/24 per dollar, its highest level since June 27, 2013 hit in the previous session, Thomson Reuters data showed.
One-month forward premiums fell to 10/20 cents, the lowest since Aug. 19, 2011, compared with Wednesday's 22/28, with dealers citing expectations of further gains in the currency for the fall.
"The currency is on an appreciation trend," said a dealer, asking not to be named.
"The state banks were buying at 130.23 levels. That prevented the gain, but forward premiums are coming down with lots of forward selling."
Dollar purchases by two state banks helped curb volatility by mopping up liquidity and smoothening transactions, dealers said. The central bank usually directs the market through the two state banks. But dealers said it was not quite sure if the state banks were buying for the central bank.
Central bank officials were not immediately available for comment.
Dealers said the fuel import bill, which accounts for around 20 percent of monthly imports, is also on the decline because the country has been shifting to alternative power sources such as coal and hydro.
Sri Lanka's main stock index was 0.58 percent, or 38.38 points, up at 6,652.22 at 0630 GMT after hitting 6,661.69, its highest since Oct.13, 2011. Turnover was 1.61 billion rupees ($12.37 million), with 45.3 million shares changing hands.
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