Rupee ends weaker on importer dollar demand

Reuters - The Sri Lankan rupee ended weaker on Tuesday, as importer dollar demand surpassed mild selling of the greenback by exporters, dealers said.

The spot rupee ended at 158.60/75, weaker from Monday’s close of 158.50/60.

The currency hit an all-time low of 158.80 per dollar on Friday, surpassing its previous low of 158.50 hit on May 16.

The currency has declined 3.2% so far this year.

“Today there was importer demand from oil, construction related and some commodities. We saw some state banks also buying dollars to cover their imports,” a currency dealer said.

Dealers said the rupee will be under pressure, with exporters staying on the sidelines in anticipation of a fall in the unit, in line with other emerging market currencies.

The pressure on the currency is unwarranted as gross external reserves are at $9.1 billion and the real effective exchange rate indexes indicate that the currency is competitive, the central bank has said.

Foreign investors sold government securities worth a net 787.24 million rupees ($4.97 million) in the week ended May 30, bringing the outflow so far this year to 17 billion rupees, central bank data showed.