IMF money will stabilise rupee: Basil

Tuesday, 3 April 2012 01:40 - - {{hitsCtrl.values.hits}}

Economic Development Minister Basil Rajapaksa yesterday had said the rupee would stabilise once the IMF money came into the country’s $ 59 billion economy.

“Some people are holding dollar conversions and I think they will bring them when they see the stability. The stability level will be a price suitable for importers, exporters and Government,” Rajapaksa told reporters, without elaborating, Reuters reported.

The rupee edged down on Monday on last-minute importer dollar demand for the upcoming New Year season, and as traders shrugged off an expected $ 400 million inflow from the International Monetary Fund’s latest release of a loan tranche.

The rupee weakened to 128.25/128.30 a dollar from Friday’s close of 128.10/128.30, in light trade with low dollar sales by exporters ahead of the April festival season. The currency has risen 2.6% since it hit a record low of 131.60 on 19 March.

But it has fallen 10.9% since the Central Bank stopped defending it on 9 February.

The IMF on Friday said it will consider making a $ 400 million disbursement on Monday and the final $ 400 million tranche of a $ 2.6 billion loan a few months later.

Analysts expect depreciation pressure to remain in the medium to longer term until the country sees stronger export revenues.

The Central Bank on Friday said that more than $ 500 million in investment is expected over the next few weeks, after the country received $ 164.2 million of inflows into the stock market and $ 400 million into Government securities in the first quarter.

A hike in motor vehicle import taxes by the Government pulled the stock market 0.4% or 21.50 points down to 5,398.70 to a one-week low with the motor sector index falling 8.11%.

The new tax policy also pulled down shares of India’s Bajaj Auto, which account for 10% of overall sales in Sri Lanka, by 1.4%.

The day’s turnover was Rs. 694.6 million ($ 5.42 million), well below this year’s daily average of 1.35 billion. Foreign investors were net buyers of 34.4 million.

The Colombo Bourse is one of the worst performers this year among Asian markets, with an 11.1% loss.