Rupee hits new low on importer dollar demand

Reuters: The rupee hit an all-time low for a second straight session on Friday due to importer dollar demand, but ended steady as exporters sold the US currency in late trade, dealers said.

The rupee fell to a low of 156.20 per dollar in intraday trade, before recovering to close at 156.05/13, little changed from Thursday’s close of 156.05/15.

“Importer demand was there today from oil and gas importers. But we saw some exporters and remittance flow when the currency traded above 156 levels,” said a currency dealer.

The rupee has weakened 1.66% so far this year after declining 2.5% last year and 3.9% in 2016.

It is expected to be under pressure from continued importer demand for dollars ahead of the traditional New Year in April, dealers said.

A gradual depreciation in the rupee and higher volatility this year are expected on account of debt repayments by the Government, they added.

The International Monetary Fund said on 9 March that Sri Lanka’s economy remains vulnerable to adverse shocks due to its large public debt and low external buffers.

The Government must repay an estimated Rs. 1.97 trillion ($12.68 billion) in 2018 – a record high – including $2.9 billion of foreign loans and a total of $5.36 billion in interest.

Foreign investors sold Government securities worth a net Rs. 3.2 billion in the week ended 7 March, Central Bank data showed.