Rupee hits record low on importer dollar demand

Reuters: The Sri Lankan rupee touched an all-time low yesterday (19 March) on dollar demand from importers, but selling of the US greenback by exporters late in the day eased some pressure on the currency, dealers said.

The rupee touched 156.20 per dollar intraday, matching the record low it hit on Friday (16 March), before recovering to close at 156.10/15, slightly weaker from the previous session’s close of 156.05/13.

“The importer demand is there, but we have seen some exporters and remittance coming in during the latter part of the day,” said a currency dealer.

The rupee has weakened 1.69% so far this year after declining 2.5% last year and 3.9% in 2016.

The currency is expected to remain under pressure on continued importer demand for dollars ahead of the traditional New Year in April, dealers said. A gradual depreciation in the rupee and higher volatility this year are expected on account of debt repayments by the government, they added.

The International Monetary Fund said on 9 March that Sri Lanka’s economy remains 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 high - 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. 3.1 billion in the week ended 14 March, Central Bank data showed.