Rupee ends lower on importer dollar demand

Reuters: The rupee ended weaker on Friday as dollar demand from importers and banks outpaced inward remittances and the selling of the US currency by exporters, dealers said.

The rupee closed at 155.15/25 per dollar, compared with Wednesday’s close of 155.05/15. Sri Lanka’s stock, bond and foreign exchange markets were closed on Thursday for a holiday.

The rupee hit a record low of 155.90 per dollar on 14 February.

“Import settlements were there today being yesterday a holiday. There was demand today. There were remittances also but they were not sufficient to cover the imports,” said a dealer.

The local currency has weakened 1.1% so far this year, after declining 2.5% last year and 3.9% in 2016.

It is expected to be pressured by continued importer demand for dollars ahead of the traditional New Year in April, dealers said.

Gradual depreciation in the rupee and higher volatility this year are expected on account of debt repayments by the Government, dealers added.

The Government must repay an estimated Rs. 1.97 trillion ($ 12.68 billion) in 2018 – a record high – 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. 3.7 billion in the week ended 21 February, Central Bank data showed.