Rupee rises on inward remittances, exporter dollar sales

Reuters: The rupee closed higher on Thursday as dollar selling by exporters late in the day and inward remittances surpassed demand for the U.S. currency by importer earlier, dealers said.

The rupee, which traded at 156.00/10 per dollar earlier in the session, closed at 155.50/70 per dollar, compared with Wednesday’s close of 155.60/70.

“There was demand from foreign banks in the morning. But remittances and exporter dollar conversions came (during the) latter part of the day,” said a currency dealer.

The rupee gained 0.4% this week. The markets will be closed for a holiday on Friday. Normal trading will resume on Monday.

Dealers expect pressure on the currency to ease with more inward remittances ahead of the traditional New Year in mid-April.

The rupee touched an all-time low of 156.20 per dollar on March 16. The rupee has weakened 1.43% 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, dealers have said.

The International Monetary Fund said on March 9 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 sold government securities worth a net Rs. 211.7 million in the week ended 21 March, Central Bank data showed.