August 11, 2017 / 7:36 AM / 10 months ago

Sri Lankan rupee holds steady as dollar demand offsets supply

COLOMBO, Aug 11 (Reuters) - The Sri Lankan rupee traded steady on Friday as banks and exporters sold the dollar, offseting mild importer demand for the U.S. currency, dealers said.

The spot rupee traded at 153.10/15 per dollar at 0650 GMT, compared with Thursday’s close of 153.10/20.

“Rupee is trading steady. We don’t see state banks in the market,” a currency dealer said, requesting anonymity.

Dealers said the market sees gradual depreciation of the rupee and exporters have been reluctant to sell the dollar on speculation that the rupee would fall below 160 per dollar.

Sri Lanka’s central bank is targeting a more flexible exchange rate regime, the government said in a document outlining its policies to the International Monetary Fund.

The central bank will aim to develop a deeper and more liquid foreign exchange market, adequate systems to review and manage exchange rate risks, and a transparent intervention policy, consistent with an inflation targeting regime, it said.

The central bank has intervened in the foreign exchange market since late February only to build up reserves or to stem excessive movements in the exchange rate and will continue to do in the future as well, the document released by the IMF showed.

The banking regulator held its policy rates steady last week and said tightening measures are helping cool inflation and credit growth, signalling receding concerns about price pressure as it focuses on supporting an economy hit by extreme weather.

Sri Lankan shares were 0.12 percent weaker at 6,508.40, as of 0709 GMT. Turnover was 215.6 million rupees ($1.41 million). ($1 = 152.9000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

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