COLOMBO, Sept 25 (Reuters) - The Sri Lankan rupee traded firmer on Wednesday morning as the central bank asked certain banks not to trade above 132.00 per dollar, dealers said.
The rupee spot traded at 131.97/132.00 by 0702 GMT, compared with Tuesday's close of 132.18/22.
'Rupee is firmer on moral suasion. It has been capped at 132.00,' said a currency dealer asking not to be named.
Two other dealers confirmed the move.
Central bank officials who are authorised to talk to the media were not available for comment.
Central Bank Governor Ajith Nivard Cabraal earlier this month said moral suasion is in the Monetary Law Act as well as in almost every country's central banking law and all central banks are expected to make use of such instruments.
Many dealers expect the rupee to hold steady around the 132.00 level due to inflows from the National Savings Bank's $750-million 5-year bond issue.
However, some dealers also said the rupee could falter in the medium term, noting the recent pressure caused by lack of steady dollar inflows from exports and remittances from overseas workers.
The currency hit a record low of 135.20 on Aug. 28, but has managed to stem further losses since then. It has fallen 3.6 percent this year, after depreciating about 10 percent in 2012.
The rupee has been falling since early July when foreign investors started pulling out of local bonds as U.S. Treasury yields rose in anticipation of the U.S. Federal Reserve trimming its stimulus.
In the event, the Fed surprised markets last week by keeping to the current $85 billion-a-month bond-buying programme, helping to steady the rupee and other risk-sensitive currencies globally.
Foreign holdings in Sri Lankan government securities hit a more than six-month low last week after falling for four straight weeks.
An official at the central bank's public debt department said foreign holdings fell 5.47 percent in the four weeks ended Sept. 17 to 475.92 billion rupees ($3.60 billion), the lowest since March 6.
Sri Lanka's main stock index was down 0.07 percent at 0655 GMT. It had hit a more than eight-month low on Sept. 9.
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair) Keywords: MARKETS SRILANKA/
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