Rupee firms as remittances boost dollar inflows

COLOMBO (REUTERS): The Sri Lankan rupee ended slightly firmer yesterday as remittances boosted dollar inflows, helping offset the importer dollar demand, traders said.

The rupee traded at 160.07 early in the session and closed at 159.90/160.05 per dollar, compared with Thursday’s close of 159.95/160.05. It has declined 4.1 percent so far this year and hit a record low of 160.17 on June 20.

Sri Lanka’s Central Bank Governor, Indrajit Coomaraswamy, had said earlier that the rupee’s decline was driven mainly by factors outside of Sri Lanka and that emerging-market currencies were under pressure.

The Central Bank is concerned that dollar hoarding and market manipulation are exacerbating the rupee’s weakness and has the tools to correct any misalignment in the exchange rate, Coomaraswamy told Reuters.

The International Monetary Fund said last month that Sri Lanka’s economy remained vulnerable to adverse shocks due to a sizeable public debt and large refinancing needs.

Foreign investors sold government securities worth a net Rs.9.4 million (US$58,787) in the week ended July 11, bringing the outflows so far this year to Rs.29.7 billion, Central Bank data showed.