The Sri Lankan rupee edged down to a near eight-month low in early trade on Monday as the central bank asked banks not to buy dollars beyond 130.60 with the local currency remaining under pressure on concerns of further foreign outflows.

The rupee was quoted at 130.60/65 per dollar at 0511 GMT, a tad weaker from Friday’s close of 130.60. The currency hit a near eight-month low of 130.60/70 last week.

“No big flows were seen and we have seen a state bank offering case by case when there is an import bill. Other than that it’s a quite market,” a currency dealer said on condition of anonymity.

Dealers said the central bank did not allow any trade above 130.60 rupees a dollar and exporters are holding on to their positions expecting the currency to weaken further. The central bank was not immediately available for comment.

Swarna Gunaratne, director at the central bank’s Economic Research Department, said the central bank had intervened in the market on Friday selling $3 million to stablise the rupee.

Dealers also said the currency was still under pressure due to foreign selling in Sri Lanka’s government bonds.  

Sri Lanka’s main stock index was 0.27 percent or 16.45 points down at 6031.73 at 0534 GMT.

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