Rupee hits record closing low; CB intervenes

REUTERS: The Sri Lankan rupee closed marginally weaker yesterday and ended at a record closing low, prompting the Central Bank to sell dollars to support the domestic currency, dealers said.

The rupee ended at its record closing low of 157.90/158.10 per dollar, compared with Wednesday’s close of 157.80/95.

The currency hit an all-time low of 157.90 per dollar on May 2. It has declined 0.2 percent so far this month after a 1.5 percent fall in April.

“The market was dull today as investors are worried over the global uncertainties on top of local issues,” a currency dealer said, asking not to be named.
“The Central Bank sold to select banks at Rs.157.90 per dollar.”

Officials at the Central Bank of Sri Lanka were not immediately available for comments.

The dollar eased slightly from 2018 highs ahead of U.S. April inflation numbers yesterday and as currency markets eyed the Bank of England’s policy meeting and inflation report.

The rupee will stabilise and the monetary authority will intervene to smooth high volatility as there is no reason for a weaker currency, Nandalal Weerasinghe, Senior Deputy Governor at the Central Bank, said last week.

The Central Bank said on April 26 it would intervene to support the rupee when necessary and that there was no reason for the rupee to be under pressure given the country’s record US $10 billion foreign currency reserves.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the government. But Weerasinghe on Thursday said debt repayment by the government will not have an impact on the currency.