Sri Lankan rupee little changed; central bank dollar buying caps rise

COLOMBO: The Sri Lankan rupee was largely steady on Wednesday as importer dollar demand offset sales of the US currency by banks and exporters, while the central bank's dollar buying prevented an appreciation in the local currency, dealers said.

The spot rupee traded at 153.68/73 per dollar at 0648 GMT, hardly changed from Tuesday's close of 153.70/75.

"There is exporter dollar sales and we saw some inflows. If not for the central bank dollar buying, the rupee would have appreciated," said a currency dealer said asking not to be named.

Officials from the central bank were not immediately available for comment.

Dealers had earlier expected further depreciation of the rupee because of the central bank's no-intervention policy.

The spot rupee resumed trading on June 19 for the first time since May 5, when the central bank fixed its reference rate at 152.50.

Dealers said they expected seasonal demand for dollars to pick up from August.

The rupee has been under pressure since early this year after the central bank stopped providing support for the currency at a time when the island-nation faces a balance of payments crunch.

The central bank is also compelled to buy dollars from the market to meet the reserve target set by the International Monetary Fund (IMF) under a $1.5 billion, three-year loan programme.

Sri Lankan shares were steady at 6,747.27, as of 0654 GMT. Turnover stood at 350.5 million rupees ($2.28 million).