Rupee closes slightly weaker; state bank dollar sales cap fall

(Colombo) REUTERS:  The Sri Lankan rupee closed slightly weaker yesterday in dull trade, while dollar selling by a state bank limited the downside, dealers said.

The rupee, which went as far as 158.90 per dollar intraday, ended at 158.70/90 per dollar, compared with Friday’s close of 158.60/159.00.

The spot rupee hit an all-time low of 160.17 per dollar on Wednesday, and has declined 3.5 percent so far this year.

“We have seen a state bank selling at 158.90 today, possibly on behalf of the Central Bank. Today there was not much of trade,” a currency dealer said.

The Central Bank officials were not available for comment.
The pressure on the rupee eased last week after the island nation received more than half a billion dollars from a Chinese port operator.

After market hours on Wednesday, the state-run port authority said China Merchants Port Holdings has made a US $ 584 million payment as part of a US $ 1.12 billion deal to operate the deep sea Hambantota port. Dealers said they expect the rupee to trade in the 163-165 per dollar range by the end of the year.

The International Monetary Fund (IMF) said on Wednesday Sri Lanka’s economy remains vulnerable to adverse shocks because of sizable public debt and large refinancing needs. 

Head of the IMF mission to Sri Lanka, Manuela Goretti, told reporters after markets hours on Wednesday that she expected the currency to remain under pressure.

Foreign investors sold government securities worth a net Rs.2.9 billion in the week ended June 20, bringing the outflows so far this year to Rs.25.5 billion, the Central Bank data showed.