COLOMBO: The Sri Lankan rupee traded steady on Wednesday, hovering near a three-week low, as exporter dollar sales offset importer demand for the US currency, but dealers expect the rupee to face some downward pressure during the week due to import bills.
The rupee was traded flat at 130.27/29 per dollar at 0543 GMT, trading around its lowest level since July 1. Early last week, it hit a more-than-one-year closing high.
"There is importer demand from the state banks, probably from oil imports," a currency dealer said on condition of anonymity. "So the rupee is under downward pressure." Exporter dollar sales helped ease the pressure in early trade on Wednesday, dealers said. Dealers, however, said they did not see any impact on the rupee due to $307 million in outflows from government securities a week earlier.
The central bank also said this would not affect the rupee.
Dealers said though the $307 million has been shown as outflows, foreign investors have not taken the funds out of the country.
A currency dealer at a foreign bank, which usually deals with foreign trading in government securities, on Monday said the country could also see similar amount of inflows in the near future. He did not elaborate.
The central bank last week said the rupee would have appreciated to around 125 rupees per dollar had it not intervened by absorbing $750 million from the domestic foreign exchange market this year through July 14.
Dealers had been expecting the rupee to appreciate due to lack of strong growth in imports and private sector credit, despite lower interest rates.
Yields on treasury bills edged down further at a weekly auction last week. Dealers expect a further fall in the auction scheduled later on Wednesday.
Sri Lanka's main stock index was up 0.23 percent, or 15.85 points, to 6,812.22 at 0546 GMT, hovering around a 34 month-high.
Turnover was 470.2 million rupees ($3.61 million with 19.9 million shares changing hands.
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