Rupee slips on importer dollar demand

REUTERS: The Sri Lankan rupee closed slightly weaker yesterday as dollar demand from importers and banks surpassed mild selling of the US currency by exporters, dealers said.

The spot rupee ended at 154.00/10 per dollar, compared with Friday’s close of 153.90/154.00.

“The demand (for dollars) from smaller banks was there today. The sellers were not willing to come down and sell,” said a currency dealer.

The rupee might witness volatility with the government’s heavy debt repayment this year, said dealers.

Sri Lanka raised US $ 470.6 million on Thursday via development bonds, the Central Bank said, as the government faces unprecedented debt repayment this year.
President Maithripala Sirisena’s administration must repay an estimated Rs.1.97 trillion in 2018 - a record high - including US $ 2.9 billion of foreign loans and a total of US $ 5.36 billion of interest.

Foreign investors had sold Rs.3.2 billion worth of government securities this year up to January 10, the Central Bank data showed.

The currency fell 2.5 percent last year and 3.9 percent in 2016.

The Central Bank, while announcing its key economic policies for the year on January 3, said it has allowed more flexibility in determining the exchange rate based on the present market conditions.

It added intervention policies will be adopted consistent with a flexible exchange rate regime and supportive of improving foreign exchange market functionality and maintaining a competitive exchange rate will be an important objective.