Rupee falls on importer dollar demand, political uncertainty

Saturday, 17 February 2018 00:00 - - {{hitsCtrl.values.hits}}

Reuters - The rupee edged down on Friday on importer dollar demand, with political uncertainty also weighing on sentiment, dealers said.

The rupee ended at 155.10/20 per dollar compared with Thursday’s close of 154.90/155.00.

“There was a little bit of importer dollar demand and we saw a state bank buying dollars,” a dealer said, asking not to be named.

The currency hit a record low of 155.90 on Wednesday, surpassing its previous closing low of 155.00 hit on Monday after the ruling coalition government suffered a shock defeat in local elections.

The local currency has weakened 1.1 percent so far this year. The domestic currency lost 2.5 percent last year and 3.9 percent in 2016.

The currency is expected to be pressured by continued demand for dollars from importers, dealers said.

Dealers also said they expect a gradual depreciation in the rupee and higher volatility this year on account of debt repayments by the Government.

Sirisena’s administration must repay an estimated Rs. 1.97 trillion ($12.85 billion) in 2018 - a record high - including $2.9 billion of foreign loans and a total of $5.36 billion in interest.

Foreign investors net-sold Rs. 2.1 billion worth of government securities in the week ended 14 February, Central Bank data showed.

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