COLOMBO, Jan 5 (Reuters) - The Sri Lankan rupee closed slightly firmer on Friday due to dollar conversions by exporters, but demand for the U.S. currency from banks capped the gains, dealers said.
The spot rupee which traded at 153.40/50 per dollar during the day, ended at 153.55/65, compared with Thursday’s close of 153.60/70.
The currency fell 2.5 percent last year and 3.9 percent in 2016.
“There were remittances and exporter conversions in the morning. But demand came in the latter part of the day from a foreign bank, probably to settle some bond outflows,” said a currency dealer.
Pressure on the currency from imports is expected to prevail until the central bank sorts out new regulations for derivatives, which has slowed forward trading in the currency, dealers said.
The central bank, while announcing its key economic policies for the year, said it has allowed for more flexibility in determining the exchange rate based on market conditions.
It has intervened only to smoothen rupee volatility and to build up reserves, the banking regulator said. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)