Rupee ends weaker on high dollar demand

(Colombo) REUTERS: Sri Lanka’s rupee ended tad weaker yesterday, as importer dollar demand surpassed the exporter greenback sales, market sources said.

The stock market closed steady in dull trade with foreign investors buying into the island nation’s risky assets.

The rupee, which touched 178.85 per dollar in early trade, ended at 178.45/55, compared with Tuesday’s close of 178.30/40, market sources said.

The local currency posted a weekly loss of 0.7 percent last week due to importers’ demand in the latter part of the week.  It has risen 2.3 percent so far this year as exporters converted dollars and foreign investors purchased government securities amid stabilising investor confidence in Sri Lanka after the country repaid a US $ 1 billion sovereign bond in mid-January. 

The bond market saw inflows of Rs.11.4 billion in the week ended February 6, recording its third straight weekly inflow, the latest Central Bank data showed.

Worries over heavy debt repayment after a 51-day political crisis that resulted in a series of credit rating downgrades dented investor sentiment as the country is struggling to repay its foreign loans. 

The rupee dropped 16 percent in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows. 

The Colombo Stock Exchange index ended steady at 5,930.47 yesterday, hovering near its lowest close since November 23 hit in the previous session.

The benchmark index fell 0.3 percent last week and declined about 1 percent in January. 

The turnover was Rs.278.9 billion, well below last year’s daily average of Rs.834 million.

Foreign investors were net buyers of Rs.83.4 million worth shares yesterday. But they have been net sellers of Rs.4.7 billion worth of stocks so far this year, and Rs.18.1 billion since the political crisis began on October 26, 2018.