Rupee hits fresh record low on dollar demand from banks, importers

Reuters: The Sri Lankan rupee touched a fresh record low of 158.80 yesterday owing to dollar demand from foreign banks and importers, but ended steady on late inflows from remittances, dealers said.

The spot rupee hit a new all-time low of 158.80 per dollar, surpassing its previous low of 158.50 hit on 16 May. However, it ended at 158.50/70, little changed from Thursday’s close of 158.50/60.

The currency has declined 3.4% so far this year.

“There was more than Rs. 1 billion ($6.31 million) outflow from a stock-related transaction and a foreign bank bought dollars, while importer demand was also there,” a currency dealer said. “Later in the day we saw some inflows from remittances.”

Dealers said the rupee will be under pressure with exporters staying on the sidelines in anticipation of a fall in the unit, in line with other emerging market currencies.

The pressure on the currency is unwarranted as gross external reserves are at $9.1 billion, and the real effective exchange rate indexes indicate that the currency is competitive, the Central Bank had said.

Foreign investors sold Government securities worth a net Rs. 787.24 million ($4.97 million) in the week ended 30 May, bringing the outflow so far this year to Rs. 17 billion, Central Bank data showed.