Rupee ends steady in dull trade

REUTERS: The Sri Lankan rupee closed flat yesterday in dull trade as importer dollar demand was offset by exporter conversion of US currency, dealers said.

The market expects higher seasonal imports and a pick-up in motor vehicle buying after taxes were slashed in last week’s budget, weighing on the local currency, they said.

The spot rupee, which was earlier traded as low as 153.78, closed at 153.70/80 per dollar, compared with Friday’s close of 153.75/8.

“It was a dull market after the weekend. But we see the rupee under downward pressure because of pick-up in seasonal imports,” a dealer said asking not to be named. He said the market had expected 4 percent fall in the currency for 2017.

“But it will be less than that and we expect the currency to hit a lowest point of 154.50 this year.”
The rupee has slipped 2.7 percent so far this year.

The market expects the currency to be under pressure with people importing more lower-end vehicles on which the government has already reduced taxes.

The government imposed new taxes on high-end motor vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 budget outlined last week, as the budget deficit for the current year slipped to 5.2 percent of GDP.

Foreign investors had invested a net Rs.19.6 billion in equities this year, as of yesterday’s close, and Rs.45.7 billion in government securities, as of November 15, official data showed.