Rupee ends weaker tracking drop in regional currencies

Reuters: The rupee ended weaker on Friday, in line with declines in emerging market currencies that fell on investor fears higher US interest rates under incoming President Donald Trump would spark capital outflows from those markets.

The weakness in the rupee followed Sri Lanka’s Budget proposals on Thursday to revise corporate and withholding taxes to boost revenue and cut the 2017 fiscal deficit to 4.6% of the GDP from this year’s 5.4%.

Although it was too early to gauge the real impact of the Budget proposals, a high-tax regime could put some pressure on the rupee, dealers said.

Rupee forwards were active, with spot-next forwards trading at 148.00/10 per dollar, compared with Thursday’s close of 147.85/95.

One-week forwards were at 148.20/30 per dollar, weaker from Thursday’s close of 148.00/10.

“Dollar demand is building up,” a currency dealer said requesting anonymity. “Globally, the dollar is strengthening.”

The dollar was on course for its best week in a year on Friday. ($1 = 147.5000 Sri Lankan rupees)