Courtesy Reuters

COLOMBO, May 2 (Reuters) – The Sri Lankan rupee hit a fresh low on Wednesday on importer demand for the U.S. currency, dealers said, but recovered after the central bank intervened in the market.

The local unit gained for the first time in seven sessions on Tuesday, after hitting a record low in the previous five straight sessions as dollar demand from importers and banks surpassed greenback sales by exporters.

Deputy central bank governor Nandalal Weerasinghe on Wednesday said the central bank intervened on Tuesday and Wednesday after high volatility.

The central bank on Friday said it would intervene to support the rupee when necessary and that there was no reason for the rupee to be under pressure given the country’s record $10 billion foreign currency reserves.

The rupee hit an all-time low of 157.90 per dollar during trade, but ended at 157.80/158.00 per dollar, marginally weaker from Tuesday’s close of 157.70/90.

It fell 0.9 percent last week and 1.5 percent in April.

Still we see downward pressure on the currency because there are some debt outflows expected next week,” a currency dealer said.

The rupee has weakened 2.7 percent so far this year. It dropped 2.5 percent last year and 3.9 percent in 2016.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the government.

Foreign investors sold government securities worth a net 288.6 million rupees so far this year through April 25, central bank data showed.