Rupee weaker near all-time low on importer dollar demand

Reuters: The Sri Lankan rupee ended weaker near its record low on Thursday as importer dollar demand surpassed banks’ dollar sales, dealers said.

The rupee ended at 141.30/40 to the dollar near its record low of 141.40, falling from Wednesday’s close of 141.25/30.

Dealers said one of the two State banks through which the Central Bank directs the market, sold dollars in the range of 141.25 to 141.30.

“The rupee is weaker mainly because of importer demand. There are other outflows also. A State bank sold dollars today also, but I don’t know whether it is their positions or not,” said a dealer who declined to be identified.

Dealers said the rupee would continue to slide if the correct policy measures were not taken at the right time.

“Not only monetary policy measures, but also the other key fiscal policy measures should also be taken,” another dealer said.

The rupee hit its record low of 141.40 per dollar on Monday, but recovered slightly over the past two days after a State-run bank sold dollars.

Central Bank Governor Arjuna Mahendran said on Monday the rupee was “fairly valued” and expected it to stabilise only after a rate increase by the US Federal Reserve, likely by the end of the year.

The rupee has fallen 4.7% since the Central Bank effectively floated it on 4 September.