(Colombo) REUTERS: Sri Lanka’s rupee rose 0.3 percent yesterday due to exporter dollar sales, while a trade union action at customs dampened importer demand for the greenback.
Sri Lankan customs officers on Tuesday called off a strike that left 6,000 containers stranded at the country’s main port and put pressure on food prices, after the government agreed to reinstate their boss for three months. The strike by thousands of officials began a week ago in protest at the sacking of Director General P.S.M. Charles, who authorities blamed for a drop in customs revenue last year. The rupee closed at 177.70/178.00 per dollar, compared with Tuesday’s close of 178.20/50, market sources said.
Rupee posted a weekly gain of 2.8 percent last week as exporters converted dollars and foreign investors purchased government securities after a statement from the International Monetary Fund (IMF) and government’s US $ 1 billion debt repayment boosted confidence.
The IMF on January 16 said it would resume discussions in February for further disbursal of part of a US $ 1.5 billion loan.
The currency has appreciated 2.8 percent so far this year.
Investor confidence in Sri Lanka is stabilising after the country repaid a US $ 1 billion sovereign bond in mid-January, Central Bank Governor Dr. Indrajit Coomaraswamy said last week.
Worries over heavy debt repayment after a 51-day political crisis that resulted in a series of credit rating downgrades dented investor sentiment as the county is struggling to repay its foreign loans, with a record US $ 5.9 billion due this year, including US $ 2.6 billion in the first three months. Fitch Solutions Macro Research, a subsidiary under Fitch Group, yesterday downgraded its average forecast for the rupee to 186.00 per US dollar for this year and 192.00 for 2020, from 177.00 and 183.00, respectively.
The rupee dropped 16 percent in 2018 and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
The political crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. Sri Lanka was plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved Parliament. Wickremesinghe was later reinstalled as premier. A court ruled the dissolution was unconstitutional.
The Colombo Stock Index ended 0.41 percent weaker at 5,957.41 on Wednesday, its lowest close since January 23. Stocks declined one percent in January and ended lower for a fifth straight session.
Turnover was Rs.249.2 million, less than a third of last year’s daily average of Rs.834 million.
Foreign investors net sold Rs.6.8 million worth shares yesterday. They have been net sellers of Rs.2.8 billion worth of stocks so far this year, and Rs.16.1 billion since the political crisis began on October 26, 2018.
The bond market saw inflows of Rs.924.7 million in the week ended January 30, the latest Central Bank data showed.