Sri Lanka rupee up on state bank dollar sales; downward pressure remains

Thu Aug 29, 2013 7:53am EDT

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COLOMBO, Aug 29 (Reuters) - The Sri Lankan rupee rose
on Thursday from an all-time low in the previous session as a
state bank, through which the central bank directs the market,
sold dollars to stabilise a panicked market, dealers said. 
    However, they said the rupee cannot be defended for a long
time without strong dollar inflows. 
    The rupee spot next or one-day forward, which was active in
the market in the absence of spot trade, closed at 133.40/60
compared with Wednesday's close of 133.70/134.00.
    Spot rupee closed steady at 133.10/30, Thomson Reuters data
    The currency hit an all-time low of 135.00/15 per dollar on
Wednesday amid panic buying by importers, dealers said, but the
central bank governor said the moves were exaggerated by thin
volumes and insisted the currency would stabilise soon.
    The rupee has been falling since early July as foreign
investors have pulled out of Sri Lanka's treasury bonds as U.S.
Treasury yields rose on expectations the Federal Reserve will
soon begin to taper its massive bond buying programme.
    The rupee has fallen nearly 5.3 percent since June 7 and
nearly 4.4 percent so far this year, after depreciating by
around 10 percent in 2012.

 (Reporting by Shihar Aneez; Editing by Subhranshu Sahu)
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