COLOMBO, May 30 (Reuters) - The Sri Lankan rupee ended firmer on Friday due to inward remittances and dollar sales from banks amid lack of importer demand for the greenback from state banks, dealers said.
Dealers expect the local currency to face upward pressure until demand for imports and credit pick up.
The rupee ended at 130.35/38 per dollar, firmer from Thursday's close of 130.48/52.
"Inward remittances and bank selling pushed the rupee up with mild importer dollar demand," said a currency dealer.
Ananda Silva, one of the two deputy governors at the central bank, told Reuters on Wednesday that the monetary authority has absorbed over $400 million so far this year to prevent a sharp appreciation in the rupee.
Central bank Governor Ajith Nivard Cabraal told Reuters last week that the currency was performing as the bank expected, and there was no pressure to appreciate or depreciate.
Dealers say the central bank's intervention has prevented gains in the currency and expect it to face upward pressure until credit growth and imports pick up.
While maintaining the policy rate for the fourth straight month last week, Sri Lanka's central bank introduced a new guarantee scheme for gold loans to boost credit growth that fell to a four-year low in March.
Despite multi-year low interest rates, data last week showed private sector credit grew at a four-year low of 4.3 percent in March from a year earlier. It hit a record 35.2 percent in March 2012.
The latest trade data on Monday showed imports have gained 8.2 percent in March, while exports hit a record high of $1.07 billion, helping to narrow the March trade deficit by 15.5 percent compared with a year earlier.
Cabraal said on May 19 that private sector credit growth would reverse its trend and pick up to around 15 percent by end-2014 and continue to improve through 2016. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)