COLOMBO, Jan 12 (Reuters) - The Sri Lankan rupee closed weaker on Friday as dollar demand from importers and banks surpassed mild conversions by exporters, dealers said.
The spot rupee traded at 153.97 during the day before ending at 153.95/154.05, compared with Thursday’s close of 153.80/85.
“The demand (for dollars) was there from a state bank and a foreign bank,” said a currency dealer.
Pressure on the currency from imports is expected to prevail until the central bank sorts out new regulations for derivatives, dealers said.
Sri Lanka aims to raise $500 million this month via development bonds (SLDB), the central bank said on Monday, as the government faces unprecedented debt repayment this year.
The currency fell 2.5 percent last year and 3.9 percent in 2016.
The central bank, while announcing its key economic policies for the year last week, said it has allowed for more flexibility in determining the exchange rate based on market conditions.
It has intervened only to smoothen rupee volatility and build up reserves, the banking regulator said.
Sri Lanka’s stock, bond, and foreign exchange markets are closed on Monday for a bank holiday and trading will resume on Tuesday. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)