COLOMBO, Jan 8 (Reuters) - The Sri Lankan rupee ended unchanged on Wednesday despite dollar demand from importers and foreigners who sold rupee bonds as a state bank sold the greenback to prevent fall in the local currency, dealers said.
The spot rupee ended 130.80/90 per dollar, unchanged from Tuesday’s close.
The local currency fell 0.1 percent on Tuesday on foreign sales in rupee bonds despite being under pressure to gain due to expected $1 billion in inflows from a sovereign bond.
Dealers said one of the two state banks, through which the central bank directs the market, sold dollars at 130.80 after the local currency faced downward pressure when foreigners bought dollars to exit rupee bonds.
They said the rupee is under pressure to appreciate in the near future, but by how much would depend on what the central bank wanted to do -- whether to buy the inflows to build up its reserves or increase dollar liquidity in the market.
A source close to the sovereign bond deal said the inflows are expected next week.
Sri Lanka sold a $1 billion, five-year sovereign bond at par to yield 6.00 percent.
The central bank on Thursday, while revealing its financial and monetary policies for 2014, said it expected the rupee to strengthen in the medium term and its direct intervention in the foreign exchange market would be minimum.
The local currency has gained about 3.3 percent since it hit a record low of 135.20 on Aug. 28. It lost 2.5 percent in 2013. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Gopakumar Warrier)