Rupee hits record low; lack of exporter dollar sales weigh

COLOMBO (Reuters): The Sri Lankan rupee hit a record low 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 159.80 per dollar, surpassing its previous low of 159.00 hit on Friday.

The currency ended the day at 159.60/90 per dollar, weaker than Friday’s close of 159.00/10. It has declined 3.9 percent so far this year. 

“There was demand for dollars and we saw some foreign banks buying dollars. But there were not many sellers, and exporters are staying away expecting further depreciation,” a currency dealer said.
“The rupee is under pressure mainly because of the global trend and this trend is not specific to the Sri Lankan rupee alone. We see the global currencies weakening against the dollar.”

Dealers said the rupee will be under pressure, with exporters staying on the sidelines anticipating a fall in the unit, in line with other emerging market currencies.

Dealers expect the rupee to trade in the 163-165 range by end of the year.

The Central Bank of Sri Lanka told the Daily Mirror that recent pressure on the rupee was due to low dollar supply, the greenback’s strengthening, rising oil prices, and capital outflows from the emerging markets due to rising U.S. interest rates.

“Currently, the exchange rates of many countries compared to the U.S. dollar are at historic lows,” the newspaper quoted the central bank.

The Central Bank was not immediately available for comment.

Foreign investors sold government securities worth a net Rs.2.8 billion in the week ended June 6, bringing the outflow so far this year to Rs.19.9 billion, the Central Bank data showed.