Monday, August 17, 2009

Sri Lanka rupee firms on foreign inflows-dealers

COLOMBO, Aug 17 (Reuters) - Sri Lanka's rupee strengthened on Monday on high foreign buying of government securities and the absence of central bank intervention, dealers said.

But the central bank said it had not stopped its present policy of mopping up dollars to prevent appreciation, and said Monday's action was a one-off event caused by an especially large batch of foreign purchases.

"The central bank's intervention is not seen and there is an inflow of $200 million into the market, probably from foreigners to buy government securities," a currency dealer said on condition of anonymity. Two other dealers confirmed the move.

The rupee LKR= currency traded at 114.80/85 a dollar, up from Friday's close of 114.90/95.

"There were large inflows for government treasury bills and bonds, therefore there was a pressure for rupee to appreciate," Nandalal Weerasinghe, assistant governor at the central bank told Reuters. "But we will continue to buy to prevent appreciation."

The central bank had been buying dollars at 114.90 rupees over the last three months to prevent appreciation caused by high inflows into government securities, and to help it boost foreign exchange reserves. (Additional reporting by Shihar Aneez,; Editing by Bryson Hull)
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