COLOMBO, Nov 5 (Reuters) - The Sri Lankan rupee edged down in early trade on Tuesday due to year-end seasonal importer demand for dollars, said dealers, and they expect the currency to be under downward pressure until mid December.
Dealers said the local currency could edge down due to year-end importer demand for the greenback until mid December and then could reverse the trend due to expected inflows from foreign remittances by Sri Lankan expatriates during the festive season.
The spot rupee was at 131.10/12 per dollar at 0647 GMT, down from Monday's close of 131.00/10 per dollar, which was the lowest close in three weeks.
Analysts, however, said the currency was still under falling trend in the long term due to lack of foreign inflows from exports and foreign direct investments (FDI) and the dollars keeping the rupee steady are mainly from external borrowing.
'In the long term, we expect an annual depreciation of 3-5 percent in the rupee, because our trade gap is widening and the exports are not growing. The FDI are also not picking up as expected,' said Danushka Samarasinghe, head of research at TKS Securities.
'There is a limit for growth in remittances. Unless committed FDI realise and tourism revenue jump, the rupee will be on a depreciation trend, though it could be steady temporarily.'
Central Bank Governor Ajith Nivard Cabraal on Friday said the rupee could come under pressure due to importer dollar demand, for consumer-related goods ahead of the December festival season, but the market could manage the demand 'itself without much intervention'.
The rupee hit a record low of 135.20 on Aug. 28, but has managed to stem further losses and is up 3.12 percent since then.
Sri Lanka's main stock index was down 0.22 percent or 12.82 points at 5,914.59 as of 0618 GMT.
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu) Keywords: MARKETS SRILANKA RUPEE/
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