COLOMBO May 9 The Sri Lankan rupee traded at
its highest level in more than six months on Friday due to
inflows from remittances, with dealers saying the local currency
is gaining in the absence of credit demand and imports.
The rupee was traded at 130.38/42 per dollar at 0635
GMT, its highest intraday level since Nov. 7, and firmer from
Thursday's close of 130.50/52.
"We are giving effect to the present trend in a gradual
manner," central bank Governor Ajith Nivard Cabraal told
Dealers said steady inflows from remittances and exporter
conversions amid lack of importer dollar demand led to
appreciation in the local currency.
"There is no intervention from the central bank and one
state bank was buying on behalf of a state-run oil firm. The
state bank was buying at 130.40 rupees per dollar," said a
currency dealer on condition of anonymity.
The currency ended firmer at its highest close since Oct. 24
on Thursday after one of the two state banks, through which the
central bank usually intervenes in the market, stopped buying
the dollar at 130.60 and allowed market forces to determine the
level of the rupee.
Many dealers said the rupee would be under upward pressure
until lower credit growth and imports reverse their trend.
Despite a multi-year low interest rate regime, latest data
showed private sector credit grew 4.4 percent in February from a
year earlier, the slowest expansion since May 2010, while
imports in February fell 6.2 percent on year.
Dealers said lack of credit expansion and a contraction in
imports could hit economic growth unless the government props up
expansion through infrastructure funding.
The central bank, in its monetary policy statement last
month, however expressed confidence that private sector credit
growth would rebound in the second quarter and push up the pace
of economic growth.
The currency has been hovering between 130.55 and 130.70
since March 3, Thomson Reuters data showed, with the central
bank intervening to smoothen any sharp volatility.
Sri Lanka's main stock index was up 0.34 percent, or
21.07 points, at 6,296.80 as of 0653 GMT, its highest since Dec.
6. Turnover was at 6.8 billion rupees ($52.11 million), with
613.5 million shares changing hands.
Shares in Expolanka Holdings PLC rose 0.97 percent
to 10.40 rupees after a block deal.
Expolanka Holdings, in a filing to the bourse, said 586
million shares were bought by S.G Holdings Ltd at 10.70 rupees a
($1 = 130.5050 Sri Lanka rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil