Rupee hits record low for 10th session on importer dollar demand

Colombo (REUTERS): The Sri Lankan rupee fell to an all-time low on Monday, marking a 10th straight session of setting fresh troughs, as importer dollar demand surpassed mild selling of the greenback by exporters, dealers said.

The rupee, which hit a record low of 161.65 early in the trade, closed at 161.60/70 per dollar, compared with Friday’s close of 161.40/50.

The local currency surpassed its earlier record of 161.55 hit in the previous session. The rupee declined 1.2 percent last month, and dropped 5.3 percent so far this year.

“Dollar demand was there. Foreign banks were on the buying side and there was not much of remittances flow,” a dealer said, requesting anonymity.

“With the Indian rupee and regional currencies under pressure, the Sri Lankan rupee also will be under pressure,” the dealer added. The rupee will be under depreciation pressure with the year-end seasonal importer demand, dealers said.

Absence of dollar conversions by exporters and outflows from equities and government securities also pushed the rupee lower, analysts said.

Exporters are holding on to dollars as they expect the local currency to decline further, dealers said.

The Sri Lankan currency is also hurt by weakness in the Indian rupee. India is Sri Lanka’s biggest trading partner and the country’s currency, which hit a record low on Monday, has been one of the worst performers in Asia this year.

Foreign investors bought government securities worth a net 578.3 million rupees (US$ 3.58 million) in the week ended August 29, first time buying since April. However, they have net sold for 46.9 billion rupees worth securities so far this year, central bank data showed.