June 17, 2014 / 11:57 AM / 3 years ago

Sri Lanka rupee steady at near 1-yr high

COLOMBO, June 17 (Reuters) - The Sri Lankan rupee ended little changed on Tuesday, at its highest level in nearly a year on Monday, as light importer dollar demand offset inward remittances and state bank dollar-buying ironed out volatility, dealers said.

The rupee, ended at 130.22/26 per dollar, its highest close since June 26 last year, and little changed from Monday’s close at 130.24/25.

One of the two state banks, through which the central bank directs the market, bought dollars from select banks at 130.23 rupees, dealers said.

An official at the central bank on Monday said the local currency is under appreciation pressure and said the bank will buy excess dollars in the market after state banks’ import demand is met.

The central bank bought dollars at 130.35 rupees on May 30 but started reducing its buying from then, allowing a gradual appreciation in the rupee.

Central bank Governor Ajith Nivard Cabraal told Reuters on June 6 that the rupee was facing appreciation pressure. The bank was condoning the trend on a gradual basis to allow all stakeholders adjust to the changes.

He had said earlier that the central bank would keep intervening in the currency market to prevent a rapid rise in the rupee. The central bank had absorbed over $400 million as of May 27 to prevent a such a gain.

Dealers said the central bank’s intervention has prevented gains in the currency and they expect the rupee to face upward pressure until credit growth and imports pick up. ($1 = 130.2000 Sri Lankan Rupees) (Reporting by Ranga Sirilal)

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