Rupee plunges to record low on importer dollar demand

Reuters: The rupee fell 0.25% on Friday, hitting a record low as late importer dollar demand outpaced greenback conversions from exporters, dealers said.

The rupee is expected to fall further in the short term if the Central Bank fails to tighten interest rates or the country does not see strong inflows soon, some dealers said.

The spot rupee ended at 139.30/50 per dollar surpassing its previous all-time low of 139.00 hit on 4 September and weaker from Thursday’s close of 138.95/139.10.



Some dealers said imports of vehicles might slow down ahead of the budget, but fast moving import goods would continue.

The Government will present the 2016 annual budget in November.

Finance Minister Ravi Karunanayake said on Wednesday that the rupee will be brought to an acceptable level before too long and interest rates, which have been on a rising trend, will be pushed down.

State-run banks, through which the Central Bank directs the market, did not sell dollars or give a reference rate for the currency as in the past, dealers said.

Bourse edges down on weaker rupee, policy uncertainty

Reuters: Shares edged down on Friday in light trade for a second session, led by falls in banking and telecommunication shares, as a weakening rupee and high interest rates prompted investors to cut their positions in risky assets, brokers said.

Trading volume remained low as investors awaited cues from the policy of the new Government.



The main stock index ended 0.09% or 6.45 points weaker at 7,153.49.

Turnover stood at Rs. 474.6 million ($3.4 million), well below this year’s daily average of Rs. 1.13 billion.

“Lack of policy direction is the main problem and investors are waiting to see the budget and how the Government is going to bridge the budget deficit,” said Dimantha Mathew, a Research Manager at First Capital Equities Ltd.

“This trend will continue until a clear statement or some sort of a positive signal comes in.”

On Tuesday, the Bourse hit a near eight-week low as investors waited for economic policies from the newly-formed Government. A weaker rupee curbed investor risk appetite and rising market interest rates also hit sentiment with T-bill yields were at more than five-month high.

Foreign investors sold a net Rs. 86.2 million worth shares on Friday extending the year to date net foreign outflow to Rs. 3.29 billion worth of equities so far this year.

Shares in biggest listed lender Commercial Bank of Ceylon Plc fell 0.54% and Dialog Axiata Plc fell 0.88%, dragging down the overall index.