June 16, 2014 / 9:07 AM / 4 years ago

Sri Lanka rupee hits near 1-yr high on inward remittances

COLOMBO, June 16 (Reuters) - The Sri Lankan rupee edged up on Monday to its highest level in nearly one year on strong inward remittances while a state bank lowered its dollar buying rate, dealers said.

The rupee was at 130.23/25 per dollar at 0830 GMT, its highest since June 28, 2013, and firmer than Friday’s close of 130.25/28.

“There were heavy inflows from remittances,” a currency dealer said on condition of anonymity.

One of the two state banks, through which the central bank directs the market, lowered its dollar buying rate by two cents to 130.23 rupees, dealers said.

“There is no new direction for state banks. The dollar is anyway under appreciation pressure. If there is any excess dollars after state banks’ import demand, we will buy them,” a central bank official said.

The central bank bought dollars at 130.35 rupees on May 30 and started lowering its buying rate since then, allowing a gradual appreciation in the rupee.

Central bank Governor Ajith Nivard Cabraal told Reuters on June 6 that the rupee was facing some appreciation pressure and the bank was allowing the trend on a gradual basis to let all stakeholders adjust to the changes.

He had said earlier that the central bank would keep intervening in the currency market to prevent a rapid rise in the rupee. The central bank has absorbed over $400 million as of May 27 to prevent a sharp gain in the rupee.

Dealers said the central bank’s intervention has prevented gains in the currency and they expect the local currency to face upward pressure until credit growth and imports pick up.

Sri Lanka’s main stock index was up 0.31 percent, or 19.40 points, at 6,356.62 as of 0837 GMT. Turnover was 869.6 million rupees ($6.68 million), with 67.1 million shares changing hands.

$1 = 130.2000 Sri Lankan Rupees Reporting by Shihar Aneez; Editing by Subhranshu Sahu

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