Rupee edges up after hitting record low

REUTERS: The Sri Lankan rupee inched up after touching a record low yesterday, with dollar demand from importers offsetting limited selling of the US currency by exporters earlier in the session, dealers said.

The rupee hit an all-time low of 156.50 intraday, plunging further after it touched 156.35 in the previous session, but recovered slightly to close at 156.30/40, slightly firmer from Tuesday’s close of 156.35/45.

“The demand was there in and out. But buyers stayed away in the latter part of the day,” a currency dealer said.

Earlier this month, the country’s Central Bank governor said if the inflation rate could be maintained between 4 percent and 5 percent, the depreciation in the rupee would be around 2 percent or 3 percent.

Dealers said they expected no impact from the US $ 2.5 billion inflow anticipated later this week in two tranches of sovereign bonds, the country’s largest offering in history.

The Central Bank has bought around US $ 400 million from the market in the first three months of this year, to help build reserves and repay some debt.

The rupee has weakened 1.89 percent so far this year. It fell 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.2.4 billion so far this year through April 11, the Central Bank data showed.