COLOMBO (Reuters) – The Sri Lankan rupee traded steady for a fifth straight session on Thursday in dull trade as excess importer dollar demand was offset by greenback sales at 133.60 by a state bank, dealers said.
The state bank, through which the central bank usually directs the market, has been maintaining the dollar selling rate at 133.60 since last lowering it by 10 cents on July 2.
Currency dealers said that traders are in a wait-and-see mode due to political uncertainty before the upcoming elections.
"There are some exporter dollar sales here and there. But the excess importer dollar demand is met by the state bank’s dollar sales. Otherwise the rupee might depreciate," a currency dealer said.
The currency has appreciated 0.45 percent since it hit a record low of 134.20 on June 18.
However, dealers and analysts are wary of whether the central bank can sustain the rupee’s appreciation trend as import demand could pick up due to lower interest rates.
The pressure on the currency could also build if exporters stop selling dollars until the elections are over, dealers said.
President Maithripala Sirisena dissolved parliament on June 26 and scheduled the election for Aug. 17, in an effort to consolidate power and push through political reforms, ending a months-long deadlock.
Political analysts do not see a clear winner as yet.
In the stock market, the benchmark index was up 0.17 percent at 6,935.907 as of 0645 GMT, rising from a three-month closing low hit in the previous session. Turnover was 610.3 million rupees ($4.6 million). ($1 = 133.6000 Sri Lankan rupees)