Rupee hits record low on importer dollar demand

Reuters: The rupee hit a record low on Thursday due to dollar demand from banks and importers, but the rupee rebounded after exporters sold the greenback later in the session, dealers said.

The spot rupee which traded at a record low of 154.28 per dollar during the session, ended at 154.15/20 per dollar, compared with Tuesday’s close of 154.00/10.

The markets were closed on Wednesday for a Buddhist religious holiday.

The rupee had hit a record low of 154.20/25 per dollar on 23 January. The currency gained 0.2% last week.

“The demand was there today from some foreign banks for imports and profit repatriation. There were some remittances and exporter dollar sales during the day which prevented the fall,” 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.