Rupee appreciation recommences after IMF badge of confidence

The spot rupee, which opened around 320 against the US dollar, fell further to 317 to 318 levels by mid day trading yesterday, a day later the International Monetary Fund (IMF) opened up the nearly US $ 3.0 billion life line to the crisis-hit country.   

The rupee, which gained around 12 percent, lost some ground last week to end at around Rs.337 to a dollar. But the news on the IMF deal approval and the optimism over further inflows from other bilateral and multilateral sources improved sentiments, sending the rupee higher against the US dollar by mid trade yesterday. 

By the week ended on March 17, the rupee was up about 7 percent from the start of the year but by yesterday, it extended its gains to 12 percent again. 

The currency traders and economic analysts expect the rupee to continue to gain and trade in a band between 280 and 300 to the US dollar. 

Sri Lanka’s external sector and thereby the economy turned a corner much earlier than many would have thought and the government is mulling relaxing the remaining controls on imports to the country. 

Sri Lanka is no longer a bankrupt nation, President Ranil Wickremesinghe stressed this week and added that people could engage in normal transactions from now onwards. The country also awaits a large decline in fuel prices in a few weeks, amid the sharp dip in global oil prices, which to an extent could alleviate the hardships faced by the public and small businesses.