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COLOMBO, June 12 (Reuters) - The Sri Lankan rupee traded marginally higher on Monday as inward remittances outpaced dollar demand from importers, dealers said.
Rupee forwards were active, with spot-next forwards trading at 152.80/85 per dollar at 0539 GMT, slightly firmer from Friday's close of 152.85/90.
"There are some inward remittances and not much of (importer) demand," a currency dealer said, requesting anonymity.
The rupee has been under pressure after the central bank governor last month said the bank would allow gradual depreciation of the currency.
The central bank has set a target of $1.2 billion in direct market purchases of dollars to boost the island nation's reserves this year.
The spot rupee, which the central bank had fixed at 152.50 since May 5, did not trade on Monday.
Foreign investors bought a net 1.37 billion rupees ($8.98 million) worth of government securities in the week ended June 7. They have sold a net 39.96 billion rupees worth of securities so far this year.
Trading was dull as investors assessed the extent of damage to the economy from the recent floods and landslides.
The country's main agricultural crops - tea and rubber - were hit by the worst torrential rains in 14 years.
Damage to agricultural exports would put pressure on the rupee, currency dealers said.
However, they added there was some optimism over expected inflows in the form of international assistance that could help offset potential downward pressure on the local currency.
While the inflows are likely to help the rupee, the central bank would have to tighten interest rates to curb unnecessary credit growth and inflationary pressure, they said.
The floods could hurt overall economic growth and also widen the government's budget deficit with high infrastructure spending.
Sri Lankan shares were trading 0.07 percent weaker at 6,664.47, as of 0610 GMT. Turnover stood at 283.7 million Sri Lankan rupees ($1.86 million).
$1 = 152.6000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan