The Sri Lankan rupee traded slightly weaker on Tuesday due to light importer dollar demand in the absence of state bank intervention to defend the currency, dealers said.

The spot rupee was at 130.65/75 per dollar at 0618 GMT, edging down from Monday’s close of 130.65/70.

Some deals were done at 130.68 per dollar, breaking the psychological barrier of 130.65, which the state banks were defending on behalf of the central bank, dealers said.

“There is little bit of (importer dollar) demand. It looks like the central bank is happy to let it go a little bit,” a currency dealer said asking not to be named.

Contrary to market expectations, the local currency has been on the rise ahead of the traditional new year in April. Usually, the rupee falls in March and early April due to higher import demand ahead of the Sinhala-Tamil new year.

Central Bank Governor Ajith Nivard Cabraal said last week the rupee would be stable throughout this year due to increasing inflows through exports and remittances into the island nation.

He said the reason behind the unusual gain in the local currency was due to higher remittances and improved exports earnings in the past few months.

Dealers said lack of credit demand for imports will help reduce downward pressure on the rupee.

The currency gained 0.27 percent in the 19 sessions through Tuesday, Thomson Reuters data showed. It has been on a rising trend since Feb. 27 amid weak demand for dollars from importers, dealers said.

Dealers said the rupee was expected to trade in a range of 130.50 to 130.75 in the near term.

At 0622 GMT, Sri Lanka’s main stock index was up 0.52 percent, or 30.90 points, at 5,953.13. - Reuters