COLOMBO, Sept 18 (Reuters) - The Sri Lankan rupee was slightly weaker on Thursday on sustained importer dollar demand, but moral suasion by the central bank averted a further fall and forced banks to trade in currency forwards, dealers said.
Dealers said moral suasion by the central bank prevented trades above 130.28 while one of the two state banks through which the central bank usually directs the market sold dollars at 130.28 for select banks.
The three-day forwards, or spot next, which was active, was traded at 130.35/38 per dollar, compared with Wednesday’s close of 130.36.
The rupee spot was traded 130.28/32 per dollar at 0602 GMT, unchanged from Wednesday’s close.
“The moral suasion is there and nobody trades above 130.28,” said a currency dealer, asking not to be named.
Central bank officials were not available for comment.
Dealers said they are optimistic on the rupee outlook after Chinese President Xi Jinping on Tuesday agreed to talks for a free trade pact as Beijing tightened its embrace of the island nation along a vital shipping route.
Sri Lanka’s central bank and the People’s Bank of China on Tuesday entered into a three-year currency swap deal to facilitate the exchange of a maximum of 225 billion rupees ($1.73 billion) and 10 billion yuan ($1.63 billion).
Sri Lanka’s share index was up 0.18 percent or 12.62 points at 7,191.82 at 0609 GMT, hovering around its highest since June 10, 2011.
Turnover stood at 999.8 million rupees ($7.67 million), with 43.6 million shares changing hands. (1 US dollar = 130.2700 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)