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Tuesday, 17 April 2018 00:31 - - {{hitsCtrl.values.hits}}
Reuters - The Sri Lankan rupee fell in light trade yesterday (16 April) on importer dollar demand, while selling of the U.S. currency by exporters was also lower due to extended holidays at some firms after the traditional new year festival over the weekend, dealers said.
The rupee closed 0.2% weaker at 156.05/15 per dollar, compared with Thursday’s close of 155.70/80. The markets were closed on Friday (13 April) for a holiday.
Earlier this month, the Central Bank governor said that if inflation rate can be maintained between 4% and 5%, the depreciation in the rupee would be around 2% -3%.
Dealers expect no impacts from the $ 2.5 billion inflow expected later this week in two tranches of sovereign bonds, the country’s largest offering in history.
Dealers said the market was also awaiting some political stability after President Maithripala Sirisena suspended the parliament until 8 May.
The Central Bank has purchased over $400 million from the domestic foreign exchange market for this year through 4 April to build up international reserves.
Dealers expect pressure on the currency to rise until exporters return to the market after the extended leave.
The currency hit a record low of 156.20 per dollar on 16 March. The rupee has weakened 1.7% so far this year after declining 2.5% last year and 3.9% in 2016.
A gradual depreciation in the rupee and higher volatility are expected this year on account of debt repayments by the government, according to dealers.
The International Monetary Fund said in March that Sri Lanka’s economy remained vulnerable to adverse shocks due to its large public debt and low external buffers.
The government must repay an estimated Rs. 1.97 trillion ($ 12.68 billion) in 2018 - a record - including $ 2.9 billion of foreign loans, and a total of $ 5.36 billion in interest.
Foreign investors had sold government securities worth a net Rs. 2.4 billion ($ 15.40 million) so far this year through 11 April, Central Bank data showed.
