COLOMBO May 9 The Sri Lankan rupee ended 0.06
percent firmer on Friday at its highest level in more than 10
months, as the central bank did not intervene and allowed the
currency to appreciate amid steady inflows from remittances and
exporter dollar conversions in the absence of credit demand and
imports, dealers said.
The rupee closed at 130.42/44 per dollar, its highest
close since June 28, and firmer from Thursday's close of
130.50/52. It has gained 0.14 percent in the last two sessions.
"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.
They said there was no intervention from the central bank
and one state bank bought dollars at 130.40 rupees on behalf of
a state-run oil firm.
On Thursday, the rupee appreciated 0.08 percent as one of
the two state banks, through which the central bank usually
intervenes in the market, reduced its buying bid and allowed
market forces to determine the level of the rupee.
Many dealers said the rupee would be under upward pressure
until credit growth and imports reverse their trends.
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 hovered between 130.55 and 130.70 since
March 3 through Thursday, Thomson Reuters data showed, with the
central bank intervening to smoothen any sharp volatility.
(Reporting by Shihar Aneez and Ranga Sirilal; Editing by