Rupee recovers from all-time closing low

REUTERS: The Sri Lankan rupee gained for the first time in seven sessions yesterday, edging up from a record closing low hit in the previous session, dealers said.

The currency hit a record low for the past five straight sessions as dollar demand from importers and banks surpassed selling of the greenback by exporters.

The Central Bank on Friday said that 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 closed at 157.70/90 per dollar, marginally firmer from Friday’s all-time closing low of 157.85/95. The markets were closed for a holiday on Monday.

It fell 0.9 percent last week and 1.5 percent in April. Sri Lankan markets opened yesterday after the government, citing a Buddhist celebration on Sunday and Monday, decided to celebrate workers day on May 7.

“We see some kind of stability in the market. The rupee is holding below 158 level. Exporters have started to convert and that has helped a little bit to ease the pressure,” a currency dealer said.

A long-awaited Cabinet reshuffle which finally took place on Tuesday failed to impress some market watchers looking for an end to the country’s political uncertainty.

The rupee has weakened 3 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 so far this year through April 25, Central Bank data showed.