Reuters: The rupee on Tuesday touched an all-time low on dollar demand from importers, while exporter sales of the greenback were low due to extended holidays in corporate houses after the New Year festival, dealers said.
The rupee dropped 0.1% to 156.35 per dollar, surpassing its previous low of 156.20 hit on 16 March. The currency closed at 156.35/45, weaker from the Monday’s close of 156.05/15.
“The importer demand is there but not really major. The rupee is weaker due to the lower conversions (of exports and inward remittances) as most of the companies are still closed for New Year,” said a currency dealer requesting anonymity.
Earlier this month, the central bank governor said if inflation rate can be maintained between 4% and 5%, the depreciation in the rupee would be around 2% or 3%.
Dealers expect no impact from the $ 2.5 billion inflow expected later this week in two tranches of sovereign bonds, the country’s largest offering in history.
The market still awaits political stability after President Maithripala Sirisena suspended the parliament until 8 May, dealers added.
The Central Bank had purchased over $ 400 million from the domestic foreign exchange market for the year through 4 April to build up international reserves.
Dealers expect pressure on the currency to build until exporters return to the market after the Sinhala-Tamil New Year holiday.
The currency hit a record low of 156.20 per dollar on 16 March. The rupee has weakened 1.8% 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 due to 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 this year an estimated Rs. 1.97 trillion ($ 12.68 billion) - 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.