Rupee hits fresh record low on dollar demand from banks, importers

The Sri Lankan rupee touched a fresh record low of 158.80 yesterday owing to dollar demand from foreign banks and importers but ended steady on late inflows from remittances, dealers said.

The spot rupee hit a new all-time low of 158.80 per dollar, surpassing its previous low of 158.50 hit on May 16. However, it ended at 158.50/70, little changed from Thursday’s close of 158.50/60.

The currency has declined 3.4 percent so far this year.

“There was more than Rs.1 billion (US$ 6.31 million) outflow from a stock-related transaction and a foreign bank bought dollars, while importer demand also was there,” a currency dealer said.

“Later in the day we saw some inflows from remittances.”

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.
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, the Central Bank had said.

Foreign investors sold government securities worth a net Rs.787.24 million (US$4.97 million) in the week ended May 30, bringing the outflow so far this year to Rs.17 billion, Central Bank data showed.

-REUTERS