Rupee closes weaker as banks, importers buy dollar

Reuters: The rupee ended weaker on Tuesday as demand for dollars from banks and importers surpassed selling of the greenback, dealers said.

The spot rupee ended at 154.00/10 per dollar, compared with Monday’s close of 153.75/85. The rupee gained 0.2% last week.

“There was demand throughout the day from foreign banks and smaller banks for imports. There were remittances, but the demand was heavy,” said a currency dealer.

Dealers expect a 2-3% depreciation in the rupee and higher volatility this year on account of debt repayment by the government.

Sri Lanka mopped up Rs. 80 billion ($ 520.66 million) on Monday via treasury bonds after raising $ 470.6 million on 18 January via development bonds, the Central Bank said.

President Maithripala Sirisena’s administration must repay an estimated Rs. 1.97 trillion ($ 12.85 billion) in 2018 - a record high - including $ 2.9 billion of foreign loans, and a total of $ 5.36 billion in interest.

Foreign investors bought Rs. 3.9 billion worth of government securities this year up to 24 January, Central Bank data showed.

The rupee fell 2.5% last year and 3.9% in 2016.

Sri Lanka’s stock, bond and foreign exchange markets are closed on Wednesday for a Buddhist religious holiday. Markets will resume trading on Thursday.