Rupee edges up on exporter conversions; market awaits budget

REUTERS: The Sri Lankan rupee ended a tad firmer in dull trade yesterday led by exporter conversions, while most market participants awaited cues from the national budget due today.
Sri Lanka’s coalition government will seek to stoke exports and employment through support for the small business sector in its 2018 budget, a move that is likely keep the island nation’s fragile public finances under pressure. “There was dull trade as everybody was waiting for the budget. A state bank offered dollars,” a currency dealer said asking not to be named.

The spot rupee closed at 153.33/40 per dollar, compared with Tuesday close of 153.40/45.
Finance Minister Mangala Samaraweera yesterday announced tax concessions worth a monthly Rs.1.5 billion, a day ahead of presenting the budget, which is expected to focus on exports and fiscal consolidation.

“Finance minister’s announcement on tax reduction in essential food commodities might increase imports. So all want to wait until we see the budget policies,” the dealer said.

The rupee has slipped 2.5 percent so far this year. The Central Bank on Tuesday after holding the key monetary policy rates steady said the pressure on the exchange rate has reduced due to the flexibility it had allowed.

The island-nation has seen Rs.18.1 billion worth of net inflows into equities this year as of yesterday’s close, and Rs.42.7 billion into government securities as of November 1, official data showed.