Rupee hits new low on importer dollar demand

The Sri Lankan rupee hit an all-time low for a second straight session yesterday due to importer dollar demand, but ended steady as exporters sold the U.S. currency in late trade, dealers said.

The rupee fell to a low of 156.20 per dollar in intraday trade, before recovering to close at 156.05/13, little changed from Thursday’s close of 156.05/15.

“Importer demand was there today from oil and gas importers. But we saw some exporters and remittance flow when the currency traded above 156 levels,” said a currency dealer.

The rupee has weakened 1.66 percent so far this year after declining 2.5 percent last year and 3.9 percent in 2016.

It is expected to be under pressure from continued importer demand for dollars ahead of the traditional New Year in April, dealers said.

A gradual depreciation in the rupee and higher volatility this year are expected on account of debt repayments by the government, they added.

The International Monetary Fund said on March 9 that Sri Lanka’s economy remains vulnerable to adverse shocks due to its large public debt and low external buffers.

The government must repay an estimated Rs.1.97 trillion (US$12.68 billion) in 2018 - a record high - including US$2.9 billion of foreign loans and a total of US$5.36 billion in interest.

Foreign investors sold government securities worth a net Rs.3.2 billion in the week ended March 7, Central Bank data showed.