Rupee slips as importers seek dollars

Saturday, 31 March 2012 00:00 - - {{hitsCtrl.values.hits}}

Rupee snaps four sessions of gains
Shares up on window-dressing

Reuters: Sri Lanka’s rupee ended weaker on Friday as demand for dollars from importers outweighed dollar sales by exporters and residents exchanging remittances from workers abroad ahead of festivals in April to mark the local new year.

The rupee weakened to 128.10/128.30 per dollar from Thursday’s close of 127.60/127.80, snapping a run of four sessions of gains. The currency has risen 2.65 percent since it hit a record low of 131.60 on March 19.

But it has fallen 10.8 percent since the central bank stopped defending the currency on Feb. 9.

Analysts said depreciation pressures will remain in the medium to longer term until the country sees strong export revenues.

Following on from the central bank’s decision to allow a more flexible exchange rate, the IMF said on Friday it will consider making a $800 million disbursement of a $2.6 billion loan to Sri Lanka.

The bank in a statement said more than $500 million of further investment is expected during the next few weeks after the country saw $164.2 million of inflows into the stock market and $400 million into government securities so far this year. The stock market inched up 0.15 percent on Friday ending three days of falls on first-quarter window dressing.

Analysts said investors remained cautious about buying riskier assets due to concerns over rising interest rates, the rupee’s volatility and an expected fall in corporate profits.

The day’s turnover was 789.2 million rupees ($6.18 million), less than this year’s daily average of 1.37 billion. Foreign investors were net buyers of 190.5 million .

The Colombo bourse is one of the worst performers this year among Asian markets, with a 10.7 percent loss. ($1 = 127.8000 Sri Lanka rupees)