Rupee slips on importer demand

The Sri Lankan rupee edged down to a near eight-month low in early trade yesterday as the Central Bank asked banks not to buy dollars beyond 130.60 with the local currency remaining under pressure on concerns of further foreign outflows.

The rupee was quoted at 130.60/65 per dollar at 0511 GMT, a tad weaker from Friday's close of 130.60. The currency hit a near eightmonth low of 130.60/70 last week.

“No big flows were seen and we have seen a state bank offering case by case when there is an import bill. Other than that it's a quiet market,” a currency dealer said on condition of anonymity.

Dealers said the Central Bank did not allow any trade above Rs.130.60 a dollar and exporters are holding on to their positions expecting the currency to weaken further. The Central Bank was not immediately available for comment.

Swarna Gunaratne, Director at the Central Bank’s Economic Research Department, said the Central Bank had intervened in the market on Friday selling US $ 3 million to stabilize the rupee.

Dealers also said the currency was still under pressure due to foreign selling in Sri Lanka’s government bonds.