Rupee ends weaker on importer dollar demand

REUTERS: The Sri Lankan rupee closed weaker yesterday as dollar demand from importers and banks surpassed mild conversions by exporters, dealers said.
The spot rupee ended at 153.80/85, compared with Wednesday’s close of 153.70/80.

“There was demand today from a state bank probably to pay some oil bills. Then we saw some demand from a foreign bank too,” said a currency dealer.
“The inflows were not that heavy today.”

Pressure on the currency from imports is expected to prevail until the central bank sorts out new regulations for derivatives, dealers said.

Sri Lanka aims to raise US$500 million this month via development bonds (SLDB), the Central Bank said on Monday, as the government faces unprecedented debt repayment this year.

The currency fell 2.5 percent last year and 3.9 percent in 2016.

The Central Bank, while announcing its key economic policies for the year last week, said it has allowed for more flexibility in determining the exchange rate based on market conditions.

It has intervened only to smooth rupee volatility and build up reserves, the banking regulator said.