Sri Lankan rupee trades slightly weaker on dollar demand
COLOMBO Dec 27 (Reuters) - The Sri Lankan rupee closed slightly weaker on Friday as importers bought dollars while many investors were on year-end holidays and banks were reluctant to sell their dollars, dealers said.
The spot rupee closed at 130.75/80 per dollar, slightly weaker from Thursday's close of 130.72/75.
"We have seen some importer dollar demand and the banks were reluctant to sell dollars as it's year end," said a currency dealer who declined to be identified.
Dealers expect the rupee to be under downward pressure in January due to a lack of demand and despite a sharp reduction in interest rates.
The central bank cut the key monetary policy interest rate by 50 basis points in October and has slashed them by 125 basis points since December 2012 to multi-year lows. Yields on treasury bills dropped to their lowest since November 2011 at last week's auction.,
Private sector credit growth, which fell to 7.4 percent year-on-year in October from 7.6 percent the previous month, has yet to pick up in line with the reduction in interest rates.
Dollar buying by a state bank offset the boost to the rupee from expatriates sending money home to their families for Christmas and New Year. The local currency has gained 3.4 percent since it hit a record low of 135.20 on Aug. 28. (Reporting by Ranga Sirilal; Editing by Robert Birsel)
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