COLOMBO: The Sri Lankan rupee traded steady on Wednesday at its highest in more than a year as inflows from remittances and exports offset U.S. currency demand from importers while state banks' dollar buying curbed upward pressure on the local currency.
The rupee was flat at 130.18/20 per dollar at 0705 GMT, its highest close since June 28, 2013.
"The rupee is flat in dull trade. Not much of trades are taking place. But the bond market is active with excess liquidity and expecting treasury bill rates to come down further," said a currency dealer, asking not to be named.
Yields in treasury bills are already at multi-year lows.
On Tuesday, an official from the central bank's international operations department told Reuters that the bank was buying dollars from the market to curb excess volatility as there have been continuous inflows during the last few weeks.
The official said the rupee would have appreciated to around the 125-per-dollar level had the central bank not intervened to prevent sharp gains.
The central bank had absorbed $750 million from the domestic foreign exchange market this year through July 14, he said.
Dealers said the two state banks, through which the central bank directs the market, bought dollars at 130.18 per dollar.
The central bank kept policy rates steady at multi-year lows for a sixth straight month on Monday, as expected, despite private sector credit growth slowing to a 4-1/2-year low. .
Dealers expect the rupee to be under upward pressure due to lack of imports and private sector credit growth.
Sri Lanka's trade deficit narrowed by 47.9 percent to $393.4 million in May from $754.9 million a year earlier, mainly due to lower imports, central bank data showed on Monday.
Sri Lanka's main stock index was up 0.38 percent, or 25.90 points, at 6,753.69 by 0711 GMT -- its highest since Oct. 5, 2011. Turnover was 768.1 million Sri Lanka rupees ($5.90 million), with 37.4 million shares changing hands.
Comments
Comments are closed for this article.