Rupee ends weaker on importer dollar demand

Tuesday, 17 July 2018 00:00 -     - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee closed weaker yesterday as dollar demand from importers exceeding greenback selling by exporters, traders said.

The rupee closed at 159.75/90 per dollar, compared with Friday’s close of 159.55/70. It has declined 4.1% so far this year.

“There was not much of remittances or exporter flows today,” a currency dealer said.

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

The Central Bank is concerned about dollar hoarding and market manipulation that is exacerbating the rupee’s weakness and has the tools to correct any misalignment in the exchange rate, Coomaraswamy told Reuters last week.

The International Monetary Fund (IMF) said last month that Sri Lanka’s economy remained vulnerable to adverse shocks due to a sizeable public debt and large refinancing needs.

Dealers said the downward pressure on emerging market currencies was due to the increase in US interest rates, trade tensions between China and the United States, and rising oil prices.

Spot rupee hit an all-time low of 160.17 per dollar on 20 June.

A strengthening dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, ratings agency Moody’s said late last month.

Foreign investors sold Government securities worth a net Rs. 9.4 million ($58,860) in the week ended 11 July, bringing the outflows so far this year to Rs. 29.7 billion, Central Bank data showed.