May 4, 2018 / 1:07 PM / in a year

Sri Lankan rupee ends firmer; central bank buys dollars

COLOMBO, May 4 (Reuters) - The Sri Lankan rupee ended marginally firmer on Friday, a day after a top central bank official warned against market manipulation, dealer said.

The central bank on a net basis bought dollars from the market, Nandalal Weerasinghe, senior deputy governor at the central bank told Reuters.

“The central bank bought $30 million from the market while we also sold some amount of dollars, but on a net basis, we bought dollars as we see the rupee is gradually stabilising,” Weerasinghe told Reuters.

He said the weighted average value of the currency has appreciated from Thursday’s close.

On Wednesday, the rupee hit a fresh all-time low of 157.90 per dollar.

The rupee closed at 157.50/90 per dollar on Friday, compared with Thursday’s close of 157.80/158.00.

“There was demand in the morning from importers and some fixed income outflows. We saw central bank selling dollars at 157.65,” a currency dealers said asking not to be named.

Weerasinghe on Thursday said the rupee will stabilise and the monetary authority will intervene to smooth high volatility as there is no reason for a weaker currency.

It fell 0.9 percent last week and 1.5 percent in April.

The central bank on Friday said it would intervene to support the rupee when necessary and that there was no reason for the rupee to be under pressure given the country’s record $10 billion foreign currency reserves.

The rupee has weakened 2.6 percent so far this year. It dropped 2.5 percent last year and 3.9 percent in 2016.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the government.

Foreign investors sold government securities worth a net 288.6 million rupees ($1.8 million) so far this year through April 25, central bank data showed. ($1 = 157.4300 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

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