COLOMBO, April 29 (Reuters) - The Sri Lankan rupee was little changed in dull trade on Tuesday as exporter dollar sales offset importer demand for the greenback, while dealers expect the currency to remain stable in the near term in the absence of a pick-up in private sector credit.
The spot rupee was at 130.60/61 per dollar at 0558 GMT, little changed from Monday’s close of 130.59/61.
“Exporter conversions offset importer dollar demand. The rupee is trading in a narrow band in dull trade,” said a currency dealer.
Lower credit demand from the private sector even though key interest rates have been at multi-year lows since January, has surprised dealers.
The benchmark 91-day treasury bill yield further dropped to its lowest since January 2007, data showed on Wednesday, a day after the central bank kept policy rates steady at multi-year lows.
Private sector credit grew 4.4 percent year-on-year in February, the slowest since May 2010, latest data from the central bank showed. That compared with growth of 5.2 percent in January this year and 13.3 percent in February 2013.
The central bank, in its monetary policy statement last week, expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion.
Dealers expect the rupee to trade in a range of 130.60-70 in the near future until credit growth picks up. It 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 0.61 percent, or 37.81 points, at 6,209.75 as of 0601 GMT. The market turnover was at 235.7 million rupees ($1.80 million), with 10.3 million shares traded.
Shares in large cap Ceylon Tobacco Company PLC were up 3.28 percent at 1,099 rupees, while conglomerate John Keells Holdings was higher 0.85 percent at 237.00 rupees in thin trade. ($1 = 130.6300 Sri Lanka Rupees) (Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)