Rupee firmer on dollar sales; stocks down

4 March 2017 12:00 am - 0     - {{hitsCtrl.values.hits}}

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  REUTERS: The Sri Lankan rupee was slightly higher in dull trade yesterday as exporter dollar sales surpassed demand for the greenback by importers, dealers said.
Rupee forwards were active, with two-week forwards trading at 151.85/95 per dollar at 0602 GMT, compared with Thursday’s close of 151.90/152.00.
However, dealers said the rupee would be under pressure due to dollar demand from importers ahead of the traditional Sinhala-Tamil New Year in mid-April, and as foreign investors continue to sell government securities.
Sentiment was also hit after ratings agency Moody’s said in a report that lower agricultural exports and higher imports to make up for the loss in domestic production would weigh on the current account deficit and foreign exchange reserves.

The government’s handouts to farming families affected by drought could make the fiscal deficit target a challenge, Moody’s added.
Lower agricultural output due to the drought will force the government to increase imports, dealers said. For further imports, the government needs more U.S. currency while there will be fewer dollars coming in from agriculture commodity exports. Both will increase the demand for the greenback and put pressure on the rupee.
Sri Lanka’s fuel imports in January jumped to double the typical monthly levels, with the country rushing to plug an energy shortfall as severe drought hits its hydropower output, industry sources said.
Foreign investors sold a net Rs.15.37 billion ($101.62 million) of government securities in the week ended Feb. 22, extending the outflow from such instruments to Rs.64.5 billion.
Sri Lanka could face balance-of-payments pressure due to foreign outflows from government securities, a government document showed last month, even as the island nation was in the process of raising up to $2.5 billion from foreign borrowing.
The rupee has weakened 1 percent so far this year. It fell 3.9 percent last year, following a 10 percent drop in 2015.
Sri Lankan shares were down 0.06 percent at 6,123.57, as of 0606 GMT. Turnover stood at Rs.152.3 million ($1.01 million).

 

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