COLOMBO: The Sri Lankan rupee ended slightly firmer on Wednesday, recovering from the previous day's near four-month closing low on dollar sales by banks to cover short positions in the local currency.
The spot currency edged up to 130.28/31 per dollar in early trade but closed at 130.32/35 tad firmer from Tuesday's close of 130.35/38, which was its lowest close since June 3.
"There were dollar sales by banks in the morning but in the latter half of the day we saw some importer dollar demand. But the rupee still ended stronger," a currency dealer said.
The central bank during the trade said it expects the rupee to be stable in the near future.
"We expect the Sri Lankan rupee to be stable in the coming months," Central Bank Governor Ajith Nivard Cabraal tweeted.
Dealers expect the rupee premiums or forward trade to ease due to a possible foreign outflow from government securities after the central bank's decision to limit commercial banks' access to deposit facility, a move seen by the market as an effective rate cut.
The yield in the 364-day t-bill fell 37 basis points at a weekly auction on Wednesday.
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