Sri Lanka rupee firmer on cbank direction; stocks edge up
COLOMBO, Sept 26
COLOMBO, Sept 26 (Reuters) - The Sri Lankan rupee was firmer on Thursday morning in light trade as dealers are unwilling to trade above the central bank's pre-directed rate of 132.00 per dollar, dealers said.
The rupee spot traded at 131.90/132.00 by 0445 GMT, compared with Wednesday's close of 131.95/132.05.
"Not much of demand was seen and nobody wants to buy it at higher than 132.00," said a currency dealer who declined to be named.
Many dealers expect the rupee to hold steady around the 132.00 level following inflows from the National Savings Bank's $750-million 5-year bond issue.
The International Monetary Fund on Wednesday urged the central bank to keep interest rates steady and limit its intervention in the rupee exchange rate "to dealing with excessive short term volatility". "
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 3.3 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 up 0.04 percent at 0513 GMT. It had hit a more than eight-month low on Sept. 9. (Reporting by Ranga Sirilal; Editing by Sunil Nair)