Rupee down on importer dollar demand ahead of Budget

Friday, 10 November 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee ended weaker on Thursday due to heavy importer dollar demand and the purchase of US currency by banks ahead of the national budget presentation, dealers said.

Sri Lanka imposed new taxes on motor vehicles, telecoms, banks and liquor to boost revenue in its 2018 budget presented on Thursday, as the budget deficit for the current year slipped to 5.2% of the gross domestic product.

“There was heavy imports ahead of the budget. Some banks also bought dollars to cover their short positions,” a currency dealer said asking not to be named.

The spot rupee closed at 153.60/70 per dollar, compared with Wednesday’s close of 153.33/40.

Sri Lanka’s Finance Minister Mangala Samaraweera had on Wednesday announced tax concessions worth a monthly Rs. 1.5 billion ($ 9.8 million). The presentation of Thursday’s budget ended after Sri Lanka’s markets closed.

The rupee has slipped 2.6% so far this year. The Central Bank said on Tuesday, after holding the key monetary policy rates steady, that pressure on the exchange rate has reduced due to the flexibility it had allowed.

The island nation has seen Rs. 18.1 billion ($ 117.92 million) worth of net inflows into equities this year as of Wednesday’s close, and Rs. 42.7 billion into government securities as of 1 November, official data showed.

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