COLOMBO, March 27 (Reuters) - The Sri Lankan rupee traded little changed on Monday as inward remittances offset importer dollar demand after the country’s central bank raised benchmark interest rates by 25 basis points in a move aimed at easing pressure on the currency.
On Friday, the central bank raised interest rates for the first time in eight months, saying tighter policy was a precaution against a build-up of inflationary pressures.
The rate hike could help stabilise the rupee as rising imports and outflows due to rupee bond sales by foreign investors have exerted pressure on the currency, analysts said.
Rupee forwards were active, with two-week forwards trading at 152.55/75 per dollar at 0546 GMT, compared with Friday’s close of 152.60/70.
“The demand (for dollars) was there in the morning with the rupee trading at 152.70. But with salary dates (closing in), we have seen remittances coming in, which eased the pressure on the rupee,” said a currency dealer, asking not to be named.
The central bank raised the spot rupee reference rate by 25 cents to 151.60 on March 20.
Foreign investors net bought government securities worth 70 million rupees ($461,285) in the week ended March 22. They have net sold 63.2 billion rupees of such instruments so far this year.
Sri Lankan shares were down 0.02 percent at 5,995.33 as of 0559 GMT. Turnover stood at 32.3 million rupees ($212,920.24). ($1 = 151.7500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)