July 2, 2012 / 12:38 PM / 5 years ago

Sri Lanka rupee, stocks down in thin trade ahead of holiday

* Rupee down on importer dlr demand

* Stocks weaker, turnover slumps to 3-yr low

* Rising interest rate concern hurts bourse

COLOMBO, July 2 (Reuters) - The Sri Lankan rupee edged down on Monday in thin trade on importer dollar demand, dealers said, while its share market ended weaker with turnover slumping to a more than three-year low ahead of a holiday.

The rupee closed at 133.80/90 to the dollar, slightly weaker than Friday's close of 133.50/70. It hit another in a series of fresh record lows on Thursday, at 134.30.

"Still we see pressure on the rupee due to high oil bills of around $20 million on average per day," a currency dealer said.

Sri Lanka's central bank has taken several stringent policy measures this year aimed at cutting imports, including raising policy rates twice to two-year highs and restricting credit growth, but a prolonged drought has increased oil imports for thermal power.

Currency dealers said the market was slow due to a public holiday on Tuesday, before which many traders were on holiday.

Both stock and money markets will be closed on Tuesday for a Buddhist religious holiday.

The central bank, which was a big buyer of dollars last month, told Reuters on Friday that Sri Lanka had met all June-end IMF targets for the last tranche of a $2.6 billion loan.

Dealers expect pressure on the rupee to ease if the central bank stops aggressive dollar buying.

The rupee has lost 17.5 percent of its value since November, when the government allowed a 3 percent devaluation. The sharp fall drove the island nation's annual inflation rate to a 41-month high in June, data showed on Friday.

High inflation raised concerns over the possibility of higher interest rates, which drove the Colombo Stock Exchange's main index down 0.26 percent or 12.84 points to 4,952.93, its lowest since June 14.

Turnover was 91.6 million Sri Lanka rupees ($683,600), its lowest since April 30, 2009 and well below this year's daily average turnover of 974.5 million rupees.

Foreign investors were net buyers of 31.03 million rupees worth of shares on Monday, extending the net inflow so far this year to 23.17 billion rupees. ($1 = 134.0000 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Daniel Magnowski)

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