Rupee plunge continues

Reuters: The Sri Lankan rupee hit a record closing low yesterday as importers bought dollars while exporters stayed away, expecting a further fall in the currency, dealers said.

The rupee fell 0.25% to hit a record closing low of 157.60/75 against the dollar, weakening further from its previous record low of 157.30 hit the day before. It has fallen 0.8% so far this week and 1.3% this month.

“After the rupee hit record lows, importers panicked and are buying. Exporters are not selling dollars and are waiting to see further fall in the rupee,” 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 2.5% 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 ($11.48 million) so far this year through 18 April, Central Bank data showed.