COLOMBO, Oct 10 (Reuters) - The Sri Lankan rupee fell on Monday due to importer dollar demand ahead of the festival season in December, dealers said, adding the local currency would remain under pressure due to continued dollar demand from importers until year-end.
The spot rupee was quoted between 146.85 and 146.95 per dollar, but there was hardly any trade for a second day, dealers said. It closed at 146.88/95 last Thursday.
Rupee forwards were active, and the spot-next ended at 147.15/25, compared with the previous session's close of 146.95/147.05, dealers said.
"Seasonal importer demand is there. The spot did not trade because dealers are scared of the central bank's retribution after the moral suasion," a currency dealer said, asking not to be named.
"But the moral suasion eased towards the end of the day."
Dealers said purchases of government securities by foreign investors have slowed with a decline in interest rates, while the central bank has been buying dollars from the market to accumulate reserves to meet targets set by the International Monetary Fund under a $1.5-billion loan deal.
Officials at the central bank were not available for comment.
The central bank has been under pressure from the IMF to continue rebuilding international reserves and maintain exchange rate flexibility to develop the foreign exchange market further.
The central bank usually intervenes to curb volatility in the market.
The rupee has been under pressure due to importer dollar demand, posting a 0.4 percent fall last week, following a 0.65 percent loss in the preceding week.
The government wants a strong currency through higher foreign inflows and without interventions, Finance Minister Ravi Karunanayake has said.
$1 = 146.3700 Sri Lankan rupees Reporting by Shihar Aneez; Editing by Biju Dwarakanath