Rupee extends declines, hits record low

REUTERS: The Sri Lankan rupee hit a fresh record low of 159.00 per dollar yesterday, as importer dollar demand outpaced greenback sales by exporters who held back from selling the U.S. currency expecting a further decline in the rupee, dealers said. 

The spot rupee hit an all-time low of 159.00 per dollar, surpassing its previous low of 158.90 hit on Thursday. 

The currency ended at 159.00/10 per dollar, weaker from Thursday’s close of 158.85/10. The currency declined 3.7 percent so far this year. 

“The demand was there today and there was not much of dollar selling. We saw some inward remittances, but the demand was heavy,” a currency dealer said. 
“This is a global trend and the dollar is strengthening globally. That impact is there for rupee too.” 

Dealers said the rupee will be under pressure, with exporters staying on the sidelines in anticipation of a fall in the unit, in line with other emerging market currencies. 
Dealers expect the rupee to trade between 162-163 level by the end of the year.  However, the Central Bank had said the pressure on the currency is unwarranted as gross external reserves are at US$9.1 billion and the real effective exchange rate indexes indicate that the currency is competitive. 

Foreign investors sold government securities worth a net Rs.787.24 million (US$4.96 million) in the week ended May 30, bringing the outflow so far this year to Rs.17 billion, Central Bank data showed.