Rupee hits record low on importer dollar demand

Wednesday, 24 January 2018 00:11 - - {{hitsCtrl.values.hits}}

Reuters: The rupee hit a record low on Tuesday as banks and importers bought dollars, before recovering to close slightly weaker on selling of the US currency by exporters.

The spot rupee, which traded at a record low of 154.20/25 per dollar during the day, ended at 154.05/15, compared with Monday’s close of 154.00/10.

“The pressure was there with demand (for dollars) from smaller banks. Some exporter selling came when the rupee hit 154.20/25 levels,” said a currency dealer.

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

Sri Lanka raised $ 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 ($ 12.85 billion) in 2018 - a record high - including $ 2.9 billion of foreign loans, and a total of $ 5.36 billion of interest.

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

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

The Central Bank, while announcing its key economic policies for the year on 3 January, 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.

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