Rupee hits all-time closing low

Reuters: The Sri Lankan rupee hit a record closing low yesterday, weakening for five out of six sessions, as dollar demand from importers and banks surpassed selling of the greenback by exporters early in the day, dealers said.

The currency market calmed somewhat after the Central Bank said on Thursday (26 April) that it would intervene to support the rupee when necessary, and that there was no reason for the rupee to be under pressure given the country’s record foreign currency reserves. 

The rupee closed at 157.85/95 against the dollar yesterday, weakening further from its previous record low of 157.75/95 hit on Thursday. It has been hitting record lows for five straight sessions through yesterday.

The rupee has fallen 0.9% so far this week and 1.5% this month.

“It was a buyer’s market today. The demand was there. There were some exporter (dollar) conversions in the morning but the persistent demand was there,” 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.

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.

Stock, bond and foreign exchange markets are closed on Monday (30 April) for a public holiday and markets will resume trading on 1 May.