Rupee ends down on mild importer dollar demand

REUTERS: The Sri Lankan rupee closed weaker in a holiday-shortened trading session yesterday, weighed down by mild importer demand for the greenback, dealers said. 

The market was closed at 0630 GMT yesterday due to a half-a-day bank holiday. 

The rupee, which was traded at 156.25/35 per dollar in early trade ended at 156.40/50, weaker from Thursday’s close of 156.20/35. 

The rupee hit an all-time low of 156.50 on Wednesday.  “Trade was very thin in a shortened trading session. There were no sellers,” a currency dealer said.  Earlier this month, the country’s Central Bank Governor Indrajit Coomaraswamy said if the inflation rate could be maintained between 4 percent and 5 percent, the depreciation in the rupee would be around 2 percent or 3 percent. 

Dealers said they expected no impact from the US$2.5 billion inflow anticipated this week in two tranches of sovereign bonds, the country’s largest offering in history. 

The Central Bank has bought around US$400 million from the market in the first three months of this year to help build reserves and repay some debt. The rupee has weakened 1.9 percent so far this year. It dropped 2.5 percent last year and 3.9 percent in 2016. 

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the government. 

Foreign investors sold government securities worth a net Rs.2.4 billion (US$15.36 million) so far this year through April 11, the Central Bank data showed.