Rupee hits fresh low on importer dollar demand

Reuters: The rupee hit a record low for a third successive session on Tuesday hurt by dollar demand from banks and importers, but remittances and greenback sales by a state bank checked the fall, dealers said.

The spot rupee ended at 154.60/70 per dollar, surpassing the previous low of 154.30/35 hit on Friday.

Sri Lanka’s stock, bond and foreign exchange markets were closed on Monday for a special holiday.

The currency fell 0.4% last week, surrendering a 0.2% gain made previous week.

“The demand was severe today. There was importer demand and we saw some foreign banks buying dollars, may be for a profit repatriation,” said a currency dealer.

“A state bank sold some dollars in the morning, but that was not enough to prevent the fall.”

Dealers expect a 2-3% depreciation in the rupee and higher volatility this year on account of debt repayment by the government.

President Maithripala Sirisena’s administration must repay an estimated Rs. 1.97 trillion ($ 12.85 billion) in 2018 - a record high - including $ 2.9 billion of foreign loans and a total of $ 5.36 billion in interest.

Foreign investors bought Rs. 5.9 billion worth of government securities this year up to 30 January, central bank data showed.

The rupee fell 2.5% last year and 3.9% in 2016.