Rupee down on importer dollar demand

REUTERS: The Sri Lankan rupee ended weaker yesterday due to importer dollar demand while late exporter sales of greenback capped the fall, dealers said.
The rupee which traded at 155.83 during the day closed at 155.70/75 per dollar, compared with Monday’s close of 155.50/70. It hit a record low of 155.90 per dollar on February 14.

“There were exporter conversions when the rupee touched 155.80 levels,” said a currency dealer.

“The (depreciation) pressure is there due to the seasonal importer demand.”

The rupee has weakened 1.47 percent so far this year after declining 2.5 percent last year and 3.9 percent in 2016.

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

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

The International Monetary Fund on Friday said Sri Lanka’s economy remains vulnerable to adverse shocks due to its large public debt and low external buffers.
The government must repay an estimated Rs.1.97 trillion in 2018 - a record high - including US $ 2.9 billion of foreign loans and a total of US $ 5.36 billion in interest.
Foreign investors sold government securities worth a net Rs.3.2 billion in the week ended March 7, the Central Bank data showed. Dealers also said a communal violence in the central district of Kandy weighed on sentiment.

Police said on Friday they were investigating whether 10 suspected ringleaders of a wave of attacks on Muslims by Sinhalese Buddhists had outside funding or foreign help.

After five days of violence, police said the situation has calmed down and the curfew lifted since Saturday in Kandy.