COLOMBO: The Sri Lankan rupee traded weaker on Thursday due to dollar demand from foreign bond sellers and importers, dealers said.
The spot currency traded at 130.40/45 per dollar at 0643 GMT down compared with Tuesday's close of 130.32/36. Both the stock and foreign exchange markets were closed on Wednesday for a Buddhist religious holiday.
"Rupee is weaker on bond sales. There were some bond sales," said a currency dealer asking not to be named. A bond dealer said there were some bond sales but at low volumes. "There were sales between 200 million and 300 million rupees and not in billions," he said.
Treasury Secretary P.B. Jayasundera said on Thursday appreciation of rupee is unavoidable due to higher export earnings and inflows from services.
The central bank in the last week of September limited the spot currency range to between 130.40 and 130.50, to prevent any sharp fall amid heavy equity selling and pullback by foreign investors from government securities. Currency dealers expect the rupee to weaken further on the back of sustained selling by foreign investors in government securities, which are already at multi-year lows, and rising imports in a low interest rate environment.
Overseas investors sold a net 16.9 billion rupees ($129.7 million) worth of government securities in the week ended Oct. 1, after selling 5.07 billion rupees worth of government securities in the previous week, data from the central bank showed.
Sri Lanka's stock index was down 0.06 percent, or 4.75 points, at 7,391.26 by 0652 GMT. Turnover was 801.4 million rupees ($6.15 million), with 34.4 million shares changing hands.
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