Rupee holds steady near record low

REUTERS: The Sri Lankan rupee ended steady yesterday, holding near the record low hit in the previous session, as importer dollar demand was met by greenback sales by state banks, dealers said, while a top Central Bank official warned against market manipulation.

Nandalal Weerasinghe, the Central Bank’s Senior Deputy Governor said yesterday the rupee will stabilise and the monetary authority will intervene to smooth high volatility as there is no reason for a weaker currency. “We can bring back control as in the past. We can intervene, we can do moral suasion, and we can limit the net opening position,” Weerasinghe told Reuters.

The rupee hit a fresh all-time low of 157.90 per dollar on Wednesday, the sixth session in which the rupee has hit record lows out of seven since April 23.

The rupee closed at 157.80/158.00 per dollar on Thursday, unchanged from Wednesday’s close. It fell 0.9 percent last week and 1.5 percent in April.

“Two state banks sold dollars and we don’t know if they were selling on behalf of the Central Bank. The deputy governor’s comments could give some confidence to the market,” a currency dealer said.

The Central Bank on Friday said it would intervene to support the rupee when necessary and that there was no reason for the rupee to be under pressure given the country’s record US$10 billion foreign currency reserves.

The rupee has weakened 2.7 percent so far this year. It dropped 2.5 percent last year and 3.9 percent in 2016.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the government.

Foreign investors sold government securities worth a net Rs.288.6 million (US$1.8 million) so far this year through April 25, Central Bank data showed.