Sri Lanka rupee steady on state bank dollar sales; stocks tad weaker

COLOMBO, July 4 (Reuters) – Sri Lankan rupee steadied near an eight-month low in early trade on Thursday, with a state-run bank selling dollar at 130.60 rupees as the local currency remained under pressure on concerns of further foreign outflows.

The rupee was quoted at 130.50/60 per dollar at 0545 GMT, around Wednesday’s close of 130.55. The currency hit a near eight-month low of 130.60/70 in the last three sessions. “We see a state bank offering dollar at 130.60 rupees whenever there is an import bill,” a currency dealer said on condition of anonymity.

Two state-run banks, through which the central bank directs the market, usually sell dollars to keep the currency stable.

Dealers said the currency was still under pressure due to foreign selling in Sri Lanka’s government bonds and Moody’s cutting the outlook on the country’s B1 foreign currency sovereign rating to stable from positive on Tuesday.

Dealers also said foreign investors may have concerns and could pull out from T-bonds following the outlook.

Sri Lanka’s main stock index was 0.08 percent or 4.89 points down at 6113.08 at 0551 GMT.

Stockbrokers said investors were concerned about the rupee’s fall and Moody’s outlook cut could result in further pull out of foreign funds in equities. (Reuters)