COLOMBO, June 2 The Sri Lanka rupee ended steady
on Monday as dollar inflows from remittances and banks' dollar
sales were offset by state banks' buying to prevent possible
sharp gains in the local currency, dealers and officials said.
Dealers expect the local currency to face upward pressure
until demand for imports and credit picks up.
The rupee ended at 130.35/37 per dollar little
changed from Friday's close of 130.35/38 per dollar.
Dealers said the two state banks, through which the central
bank intervenes to direct the market, bought dollars at 130.35
rupees on behalf of the central bank to prevent sharp volatility
in the currency.
The central bank, however, said the dollar buying by the
state banks was for oil imports.
"We buy only the excess dollars," said an official at the
central bank's International Operations Department.
Central Bank governor Ajith Nivard Cabraal on Friday told
Reuters that the central bank would keep intervening in currency
markets to prevent a too-rapid rise in the country's rupee
He said the country will probably see a tendency for the
rupee to appreciate in the next few years, and the central bank
is keen that whatever movement takes place happens in a "fairly
Cabraal also said the central bank does not have "an upper
pain threshold" for the rupee, but "more of a volatility
Ananda Silva, one of the two deputy governors at the central
bank, told Reuters on Wednesday that the monetary authority has
absorbed over $400 million as of May 27 of this year to prevent
a sharp appreciation in the rupee.
Dealers say the central bank's intervention has prevented
gains in the currency and expect it to face upward pressure
until credit growth and imports pick up.
Despite multi-year low interest rates, data on May 5 showed
private sector credit grew at a four-year low of 4.3 percent in
March from a year earlier. It hit a record 35.2 percent in March
($1 = 130.4000 Sri Lankan Rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by