Remittances, exporter conversions boost Sri Lanka rupee

Reuters: The rupee closed firmer on Wednesday as exporters and residents receiving remittances from workers abroad sold dollars ahead of festivals in April to mark the local New Year.

The rupee strengthened to 129.20/129.30 per dollar from Tuesday’s close of 129.80/130.00. The currency has recovered 1.8 per cent since it hit a record low of 131.60 on 19 March.

Dealers see the rupee extending gains now that demand for imported commodities ahead of the festival season is easing, and the expatriate remittances boost the dollar supply.

The rupee has fallen 11.6 per cent since the Central Bank stopped defending the currency on 9 February.

The stock market slipped in thin volumes on Wednesday as investors remained cautious of rising interest rates, the rupee’s volatility and an expected fall in corporate profits. The main share index edged down 0.16 per cent to 5,416.57. The day’s turnover was Rs. 627.2 million ($ 4.83 million), well below this year’s daily average of 1.37 billion.

Foreign investors were net buyers of 39.2 million on Wednesday, extending the net foreign inflow so far this year to Rs. 20.2 billion ($155.5 million).

The Colombo Bourse is one of the worst performers this year among Asian markets, with a 10.8 per cent loss.

T-bill yields rose between 21-25 basis points at auction on Wednesday with the 364-day T-bill rate hitting a 30-month high of 11.32 per cent.