Rupee extends losses, hits fresh all-time closing low

Reuters: The Sri Lankan rupee weakened to a record closing low yesterday, as dollar demand from importers and banks surpassed the exporter greenback sales, dealers said.

The rupee closed at 157.75/95 against the dollar yesterday, weakening further from its previous record low of 157.60/75 hit on 25 April.

The rupee has fallen 0.9% so far this week and 1.4% this month.

“There were some dollar conversions by exporters. But the demand was high from importers and also some foreigners selling Government securities,” a currency dealer said.

Some dealers said dollar purchases by oil importers, who usually buy dollars from banks, weighed on the currency.

The rupee has weakened 2.7% so far this year. It dropped 2.5% last year and 3.9% in 2016.

The International Monetary Fund said last week that the Central Bank should continue to remain vigilant in guarding against inflationary pressures, “while continuing to build reserves and supporting greater exchange rate flexibility”.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the Government.

Foreign investors sold Government securities worth a net Rs. 1.8 billion ($11.5 million) so far this year through 18 April, Central Bank data showed.