COLOMBO, Sept 17 (Reuters) - The Sri Lankan rupee
ended a tad weaker on Tuesday on mild dollar demand from
importers, but dealers expect it to be steady in the short term
due to the $750-million inflow from a bond sale by state-run
National Savings Bank (NSB).
Still, optimism around the local currency eroded slightly
ahead of a U.S. Federal Reserve meeting and as banks were
compelled to trade rupee forwards after a central bank
directive, dealers said.
The Fed meets later on Tuesday and Wednesday to decide when
and by how much to scale back its asset purchases. Dealers said
any reduction may prompt foreign investors to exit Sri Lankan
government securities, which could put the rupee under pressure.
Dealers said the three-day forward, or spot-next, was active
on Tuesday after the central bank directed some banks not to
trade spot above 132.25 rupees.
The spot-next closed at 132.30/40 per dollar, weaker from
Monday's close of 132.30/35.
The rupee spot was inactive on Tuesday after it was actively
traded in four straight sessions through Monday. It was quoted
at 132.20/30 by 1050 GMT, compared to Monday's close of
"Spot-next is active again today as the central bank asked
some banks not to trade rupee spot above 132.25 per dollar," a
currency dealer said.
Many dealers expect the rupee to be steady around the 132.25
level due to the NSB's 5-year bond inflow, which was priced to
yield 8.875 percent.
The currency hit a record low of 135.20 on Aug. 28, but has
since recovered. It has fallen 3.6 percent this year, after
depreciating about 10 percent in 2012.
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil