Sri Lankan rupee steady; bank sells dollar

COLOMBO, Dec 3 (Reuters) – The Sri Lankan rupee ended steady near its record low on Thursday as importer dollar demand offset inward remittances and greenback selling by a bank, dealers said.

The rupee closed unchanged at 143.22/27 per dollar, not far from an all-time low of 143.30 hit on Friday.

"There was import demand but we have seen a bank selling dollars in the latter part of the day which prevented the fall," said a currency dealer, asking not to be named.

"It was not clear whether the bank sold dollars on behalf of exporters or inward remittances."

Dealers said inward remittances for the festival season would ease the pressure on the local currency in the short term.

Prime Minister Ranil Wickremesinghe on Wednesday warned of pressure on the currency due to a China-led global slowdown and a possible Federal Reserve rate hike ahead of elections in the United States.

"We have got to remember that there will be pressure on our currencies and there’ll be an increase in financial market volatility as far as we are concerned," he said.

Sri Lanka is to seek an IMF stand-by arrangement to fend off a risk that its economy will be hurt next year by repercussions from events affecting major economies.

The rupee has dropped around 8.4 percent so far this year and 5.9 percent since the central bank allowed free-float on Sept. 4, Thomson Reuters data showed.

The central bank sold dollars worth a net $277.95 million in October and $523.80 million in September, latest data showed. Dealers said part of that money was spent to defend the rupee.

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Commercial banks parked 130.389 billion rupees ($910.54 million) of surplus liquidity on Thursday, using the central bank’s deposit facility at 6 percent, official data showed.

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