Sri Lanka rupee hits 11-month low on dollar demand

COLOMBO: The Sri Lankan rupee ended weaker near an 11-month low, breaching an important support level of 131.60 per dollar, on dollar buying by a state-run bank and demand for the greenback from importers, dealers said.
The rupee currency spot ended 0.23 percent weaker at 131.65/75 per dollar, near its lowest close since Sept. 18, 2012 and sliding from Thursday's close of 131.35/45.
"The rupee broke 131.60, which was a barrier because of the central bank's earlier direction. We are not quite sure if the rupee will continue to slide after breaching this barrier," a currency dealer said on condition.
Dealers also said the rupee one-day forward, which ended 131.75/80 per dollar, was active in the market and a state bank bought it in significant quantity at 131.70.
The central bank, before the currency market opened, kept its key monetary policy rates steady as expected.
The central bank also said it would closely monitor wide fluctuations in the currencies of trading partners and competitors in the international market to address any adverse effects on Sri Lanka's external balance.
The rupee fell about 4 percent between June 7 and July 18, after foreign investors started pulling out of Sri Lanka's treasury bonds due to a rise in US treasury yields.
The currency has been steady around 131.60 since July 18 as the central bank has not allowed spot dollars to be traded beyond 131.60, amid a rise in foreign holding in government securities, dealers said.