Rupee firms on exporter dollar sales

Reuters: The Sri Lankan rupee closed 0.26% stronger yesterday (26 March) as exporter dollar sales and inward remittances surpassed importer demand for the US currency, dealers said.

The rupee closed at 155.60/70 per dollar, compared with Tuesday’s (27 March) close of 156.00/10.

“We saw (dollar) conversation’s for salaries and to pay bonuses ahead of the festival, and the seasonal importer demand has also reduced. There was some general import demand, but the remittances were high,” said a currency dealer.

The rupee is expected to remain under pressure on continued importer demand for dollar ahead of the traditional New Year in mid-April, dealers said.

The rupee touched an all-time low of 156.20 per dollar on 16 March. The rupee has weakened 1.43% so far this year after declining 2.5% last year and 3.9% in 2016.

A gradual depreciation in the rupee and higher volatility are expected this year on account of debt repayments by the government, dealers said.

The International Monetary Fund said on 9 March that Sri Lanka’s economy remained vulnerable to adverse shocks due to its large public debt and low external buffers.

The government must repay an estimated Rs. 1.97 trillion ($12.68 billion) in 2018 - a record - including $2.9 billion of foreign loans and a total of $5.36 billion in interest.

Foreign investors sold government securities worth a net Rs. 211.7 million in the week ended 21 March, Central Bank data showed.