Rupee hits record low for sixth session

(Colombo) REUTERS: The Sri Lankan rupee hit a record low for a sixth straight session yesterday due to dollar demand from importers and banks to facilitate foreign bond outflows, market sources said.

The currency fell to an all-time low of 167.20 per dollar before closing at 167.10/30, compared with Tuesday’s close of 165.90/166.00. The previous record was 166.10 per dollar.

Exporters expect the rupee to be under pressure due to continued importer dollar demand and less exporter dollar sales.

The dollar continued to lose ground, slipping 0.3 percent to stay near seven-week lows against a basket of currencies, but held at a two-month high against the Japanese yen amid relief the latest round of tariffs announced by China and the United States were not as harsh as the market had expected.

An illiquid market for dollars, dollar buying by foreign banks to facilitate bond outflows and importer demand weighed on the currency, said the sources.

Sri Lanka’s Finance Ministry would not intervene in exchange rate management, Junior Finance Minister Eran Wickremaratne said on Thursday, adding that the Central Bank would intervene as and when necessary to curb excess volatility in the exchange rate and also punish speculators.

Since last week, currency dealers have been refusing to speak to the media, citing instructions from the Central Bank. However, Central Bank Governor Indrajit Coomaraswamy said that he was unaware of any such move.

The rupee has weakened 3.5 percent so far this month after a 1.2 percent drop last month, and has declined 8.9 percent so far this year.
It will be under pressure due to year-end seasonal dollar demand from importers, dealers have said.

The currency has also been hurt by weakness in the Indian rupee. India is SriLanka’s biggest trading partner and the Indian rupee, which also hit a record low on Tuesday, is Asia’s worst performing currency this year.

Foreign investors sold government securities worth a net Rs.2.6 billion in the week ended Sept. 12, extending the net outflow so far this year to Rs.55.9 billion worth of securities, the Central Bank data showed.