Rupee slips on importer dollar demand

Tuesday, 23 January 2018 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The Sri Lankan rupee closed slightly weaker on Monday as dollar demand from importers and banks surpassed mild selling of the US currency by exporters, dealers said.

The spot rupee ended at 154.00/10 per dollar, compared with Friday’s close of 153.90/154.00.

“The demand (for dollars) from smaller banks was there today. The sellers were not willing to come down and sell,” 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 1.97 trillion rupees ($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 3.2 billion rupees worth of government securities this year up to Jan. 10, 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 that 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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