COLOMBO: Sri Lankan rupee forwards traded a tad firmer on Thursday as tepid dollar purchases and mild exporter conversions helped the currency edge up.
Three-day forwards or spot next was traded at 130.80/85 per dollar at 0655 GMT, compared to Wednesday's close of 130.90/131.00.
The spot currency was not traded on Thursday, currency dealers said.
"There was no restriction from the central bank, but nobody wants to deal with the spot currency," a dealer said on condition of anonymity.
"There is importer demand for dollars, but banks are scared to trade at higher rates after the central bank prevented depreciation through moral suasion in the last few days."
The spot currency closed lower at 130.75/95 per dollar on Wednesday.
Dealers said the market was waiting for cues from the 2015 budget, scheduled for Oct. 24.
The rupee has been under pressure ever since the central bank announced moves to boost credit to the private sector in its September monetary policy review.
Central Bank Governor Ajith Nivard Cabraal, however, said at a Reuters Global Market Forum on Monday that "there would be a greater tendency for the rupee to appreciate gently in light of the improvements in the external account".
In a surprise development, yields on the 364-day t-bill rose 11 basis points to 6 percent on Wednesday, its first increase since Dec. 20, 2013, a confusing signal in a falling interest rate regime, currency dealers said.
The central bank in the last week of September limited the spot range to between 130.40 and 130.50 to prevent any sharp falls amid heavy selling in stocks and a pullback by foreign investors from government securities.
Currency dealers said the rupee would trade steady until year-end on central bank intervention and healthy foreign exchange reserves of over $9 billion.
Overseas investors sold a net 4.23 billion rupees ($32.4 million) worth of government securities in the week ended Oct. 7, after selling 16.9 billion rupees in the previous week, data from the central bank showed. Sri Lanka's stock index was down 0.66 percent, or 48.04 points, at 7,240.79 as of 0703 GMT.
Turnover was 1.07 billion rupees ($8.19 million), with 39.3 million shares changing hands.
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