Rupee closes little changed amid capital outflow worries

18 November 2016 10:11 am - 0     - {{hitsCtrl.values.hits}}

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REUTERS: The Sri Lankan rupee ended little changed on Thursday amid persistent worries about capital outflows as incoming President Donald Trump’s policies are seen aiding higher U.S. interest rates and a stronger greenback, while dollar selling by a state-run bank helped to boost sentiment. The dollar index, which measures the greenback’s strength against a basket of major currencies, touched a near 14-year high on Wednesday. Rupee forwards were active, with spot-next trading at 148.80/90 per dollar intraday before the state-run bank sold dollars at 148.75. They ended at 148.65/75 per dollar, compared with Wednesday’s close of 148.60/80.

One-week forwards were at 148.60/80 per dollar, compared with the previous close of 148.80/149.00. Exporters were reluctant to sell dollars due to global concerns and uncertainties within the SriLankan market following the national budget, dealers said. Foreign investors might pull out of emerging markets, including Sri Lanka, if the Fed is on course to raise interest rates next month, they added. “There was (dollar) demand, but we have seen some selling after the state bank sold dollars at 148.75 in early trade,” said a currency dealer requesting anonymity. The rupee was also under pressure as foreign investors exited government securities due to new taxes proposed in the budget, dealers said. The national budget has proposed to revise corporate and withholding taxes to boost revenue and cut the 2017 fiscal deficit. Foreign investors net sold government securities of Rs 34.2 billion ($231.08 million) in the four weeks ended Nov. 9, data from the Central Bank showed.

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