COLOMBO, Aug 2 (Reuters) - The Sri Lankan rupee held
near 10-month lows on Friday as importer dollar demand prevented
the currency from recovering, while further downside was
contained by a vigilant central bank eager to hold the greenback
below 132 rupees, dealers said.
The rupee was quoted at 131.60/70 at 0510 GMT, staying
steady from its Thursday's close. Spot rupee dropped to
131.65/75 on July 25, its lowest close in nearly 10 months.
'There is genuine importer dollar demand but rupee is
trading flat,' said a currency dealer on condition of anonymity.
Some dealers said that they moved in to one-day forwards
instead of spot trade following the central bank's earlier
direction to banks not to accept bids above 131.60 rupees.
The one-day forward ended steady at 131.70/75, compared with
Dealers said the pressure on the currency remains as
exporters took a wait-and-see approach, while remittances had
also dried up, adding that downward pressure on the rupee could
intensify if there were no dollar inflows in the short term.
The rupee has fallen around 4 percent since June 7, with
foreign investors pulling out of Sri Lanka's treasury bonds due
to a rise in U.S. treasury yields on expectations that the
Federal Reserve will soon begin ti trim its stimulus programme.
Dealers expect the rupee to move in a 131.50 to 132.00 range
in the short term and continue to depreciate unless the central
bank steps in with monetary tightening measures or significant
dollar inflows come into the country.
The central bank last month said foreign inflows are
expected into government securities and the downward pressure on
the currency would ease.
Sri Lanka's economy is expected to grow at 7.5 percent this
year, higher than the International Monetary Fund's estimate of
6.3 percent and up from last year's 6.4 percent growth.
However, economists are more guarded about the outlook.
While private sector credit growth is slowly picking up, they
say this isn't sufficient to help the economy expand by 7.5
percent this year despite the central bank's easy monetary
policy stance since December.
Sri Lanka's main stock index was 0.21 percent, or
12.067 points, firmer at 6,169.27 at 0531 GMT.
(Reporting by Ranga Sirilal; Editing by Shri Navaratnam)
Keywords: MARKETS SRILANKA/
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