COLOMBO, March 28 (Reuters) - The Sri Lankan rupee traded weaker on Tuesday due to dollar demand from state banks to cover import bills.
Rupee forwards were active, with two-week forwards were trading at 152.75/85 per dollar at 0628 GMT, compared with Monday’s close of 152.65/75.
“State banks have large import bills to cover and they buy dollars at higher rates,” said a currency dealer, asking not to be named.
The rupee is under pressure due to the higher seasonal import demand some oil bills, dealers said.
The central bank on Monday raised the spot rupee reference rate by 10 cents to 151.70 after the bank raised the it by 25 cents on March 20.
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.
Analysts said the rate hike, a move aimed at easing pressure on the rupee, could help stabilise the domestic currency that is hurt by rising imports and outflows due to rupee bond sales by foreign investors.
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 0.11 percent at 5,968.41 as of 0702 GMT. Turnover stood at 1.53 billion rupees ($10.09 million). ($1 = 151.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)