June 22, 2017 / 11:40 AM / 2 months ago

Sri Lankan rupee edges up ahead of cbank rate review

COLOMBO, June 22 (Reuters) - The Sri Lankan rupee ended slightly firmer on Thursday ahead of the central bank's policy review as a foreign bank sold dollars, but dollar buying by a state bank prevented further strengthening in the rupee, dealers said.

Sri Lanka's central bank is expected to keep its key interest rates steady at more than three-year highs at a policy announcement on Friday, a Reuters poll showed, to boost faltering growth hit by adverse weather.

The spot rupee, which has been trading for four straight sessions after being inactive for six weeks, ended at 153.15/25 per dollar, compared with Wednesday's close of 153.30/35.

The spot rupee resumed trading on Monday for the first time since May 5 when the central bank had fixed its reference rate at 152.50.

"A foreign bank sold dollars today for a construction-related payment. But a state bank bought dollars which negated further strengthening," said a currency dealer, requesting anonymity.

"There was no intervention or moral suasion. The state bank was buying to settle import bills."

Dealers said they expect seasonal demand for the dollar to pick up from August.

The rupee has been under pressure after the central bank said it would allow gradual depreciation of the currency and set a target of $1.2 billion in direct market purchases of dollars to boost the island nation's reserves this year, mainly to meet a target set by the International Monetary Fund for a three-year $1.5 billion loan. ($1 = 153.1000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

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