Rupee closes near record low

(Colombo) REUTERS: The Sri Lankan rupee declined yesterday and closed above its record low hit last week, while intervention by the Central Bank limited the fall, market sources said.

Prime Minister Ranil Wickremesinghe said on Monday the government would take measures to impose taxes to curb imports by US$500 million to US$1 billion to face the currency crisis.

The rupee closed at 168.90/169.00 per dollar, compared with Friday’s close of 168.50/70. Markets were closed on Monday for a holiday.

The rupee fell to an all-time low of 169.00 per dollar on Friday, in an eight-session record-setting spree.

The Central Bank will intervene aggressively to curb excess volatility in the exchange rate, Senior Deputy Governor Nandalal Weerasinghe had told Reuters on Friday.

Exporters expect the rupee to be under pressure due to continued importer dollar demand and less exporter dollar sales.

The rupee has weakened 4.5 percent so far this month after a 1.2 percent drop last month, and has declined 9.9 percent so far this year.

Globally, currency markets were mostly quiet as investors watched from the side lines before the Fed meeting. The dollar slipped 0.12 percent, but stayed above two-month lows hit at the end of last week.

An illiquid market for dollars, dollar buying by foreign banks to facilitate bond outflows and importer demand weighed on the currency, said the sources.
The rupee will be under pressure due to year-end seasonal dollar demand from importers, dealers have said earlier.

The currency has also been hurt by recent weakness in the Indian rupee. India is Sri Lanka’s biggest trading partner and the Indian rupee, which hit a record low on Sept 18, is Asia’s worst performing currency this year.

Foreign investors sold government securities worth a net Rs.8.8 billion (US$52.19 million) in the week ended Sept. 19, its highest weekly outflow since the week ended Dec. 6. Sri Lanka has suffered a net outflow of Rs.63.7 billion in securities so far this year, Central Bank data showed.