Rupee at record low on importer dollar demand

Reuters: The rupee edged lower to end at a record low on Friday due to importer dollar demand, while investors were trying to gauge the Prime Minister’s economic policy statement, dealers said.

On Thursday, Prime Minister Ranil Wickremesinghe, outlining economic priorities ahead of the 2016 Budget, said the Government would minimise tax holidays and aim to garner more revenues from the rich through direct taxes.

The rupee ended at 141.50/60 per dollar, a record closing low hit earlier on Wednesday, and a tad weaker from Thursday’s close of 141.40/60.

“Investors are still trying to judge what are the positives and negatives from the prime minister’s statement and what impact it will have on the (foreign) exchange,” a currency dealer said, asking not to be named.

Wickremesinghe said the Government would bring in a new exchange rate act while relieving the central bank of the responsibility of managing the exchange rate. A new investment act and public enterprise act also would be introduced, he said.

Investors are waiting for more clarity on economic policies from the 2016 Budget announcement, scheduled on 20 November.

Some currency dealers said the statement by Prime Minister Ranil Wickremesinghe on Thursday was confusing because he promised to suspend some taxes.

Commercial banks parked Rs. 112.3 billion ($793.64 million) of surplus liquidity on Friday, using the Central Bank’s deposit facility at 6%, official data showed.