COLOMBO: The Sri Lankan rupee traded firmer on Tuesday on inflows from exporter dollar sales and inward remittances, with dealers expecting the currency to be under upward pressure in the absence of strong growth in private credit and imports.
The rupee was traded 130.20/21 per dollar at 0625, edging up from Monday's close of 130.21/24.
"There are inflows today from remittances and exporters," said a currency dealer.
Two state banks, through which the central bank has been directing the market, have been buying the local currency at 130.21 rupees, which dealers said prevented a sharp rise.
They said the central bank's dollar buying from the market has increased rupee liquidity and sent yields on government securities lower amid lack of strong demand for private credit and imports.
The central bank has absorbed more than $750 million this year through July 14 from the market to prevent a sharp appreciation in the rupee and support exporters.
A central bank official last month said the rupee would have risen to 125 per dollar had the central bank not intervened.
The IMF last week urged Sri Lanka to limit its intervention in the foreign exchange market, a week after Finance Secretary P.B. Jayasundera said Sri Lanka was building up its foreign exchange reserves while keeping the rupee stable with the country seeing more inflows.
Sri Lanka's main stock index was 0.1 percent, or 6.74 points weaker at 6,815.41 at 0638 GMT, slipping from its highest level since September 2011.
Turnover was 976.1 million rupees ($7.50 million) with 57.1 million shares changing hands.
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