Rupee ends weaker on importer dollar demand

Reuters: The rupee ended marginally weaker on Thursday as late dollar demand from foreign banks surpassed greenback sales, traders said.

The rupee, which traded at Rs. 159.80 per dollar during the day, ended weaker at 159.75/85 per dollar compared with Wednesday’s close of 159.55/65. It has fallen 4.04% so far this year, and hit a record low of 160.17 on 20 June.

“Today, in the latter part of the day, we have seen some demand coming from a foreign bank. There were remittance flows but the demand was there at the latter part of the day,” said a currency dealer, asking not to be named.

Sri Lanka has raised import duties on small hybrid cars by more than 50%, the Government said on Wednesday, aiming to boost revenue and curb a sharp fall in the rupee.

The Finance Ministry imposed a minimum duty of Rs. 1.25 million on any hybrid car with an engine capacity of less than 1,000 cubic centimetres to discourage the imports which has pressurised the rupee currency.

Sri Lanka’s Central Bank Governor Indrajit Coomaraswamy had said earlier that the rupee’s decline was driven mainly by factors outside Sri Lanka and that emerging-market currencies were under pressure.

Foreign investors sold government securities worth a net Rs. 4.6 billion ($ 28.83 million) in the week ended 25 July, bringing the outflow so far this year to Rs. 36.2 billion, Central Bank data showed.