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Tuesday, 1 March 2016 00:06 - - {{hitsCtrl.values.hits}}
Reuters: Sri Lankan rupee forwards ended slightly weaker on Monday on importer dollar demand, and dealers said the currency will continue to be under pressure due to seasonal importer demand and after a rating downgrade by Fitch.
Fitch Ratings downgraded Sri Lanka’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to B-plus from BB-minus on increasing refinancing risks, significant debt maturities, and weaker public finances.
“This mean there is financial indiscipline. It’s a concern for international investors and market players. So the government’s borrowing cost in the international market may go up and it will hit the rupee,” a currency dealer said.
The spot rupee, which hit a record low of 144.65 per dollar when it resumed trading on Friday for the first time since 27 January did not trade on Monday. It ended at 144.40/70 on Friday.
One-week rupee forwards, which had been acting as a proxy for the spot currency, ended at 144.80/90 per dollar, weaker from Friday’s close of 144.75/90.
Seasonal import demand is picking up ahead of the local New Year season starting in April, a dealer said.
Foreign outflows from government securities also weighed on the currency.
Foreign investors sold Rs. 2.5 billion ($17.4 million) worth of government securities in the week ended 24 February, data from the Central Bank showed, taking the total offloaded since 30 December to Rs. 34.95 billion.
Commercial banks parked Rs. 47.74 billion ($331.4 million) of surplus liquidity on Monday, using the Central Bank’s deposit facility at 6.50 %, official data showed.
