COLOMBO (Reuters) - Sri Lanka’s rupee closed firmer for a second straight session yesterday, helped by dollar selling by banks and after the IMF said it would resume discussions with the island nation for further disbursal of part of a US$1.5 billion loan and the Central Bank chief said around US$5 borrowing in the pipeline could help debt repayments.
Sri Lanka will receive a loan of US$1 billion from Bank of China before the end of the January-March quarter, Central Bank Governor Indrajit Coomaraswamy told Reuters on Thursday, and is in discussions to borrow nearly US$5 billion to help the country meet repayments in the coming months.
Sri Lanka 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.
After a meeting with Sri Lanka’s Finance Minister Mangala Samaraweera, the International Monetary Fund (IMF) said on Wednesday the discussions would resume in February, after a political crisis led to talks being delayed by three months. The rupee ended at 181.50/65 per dollar yesterday, compared with 181.60/75 in the previous session, with a foreign bank selling dollars, market sources said.
On Jan.3, the rupee fell to an all-time low of 183.00 against the dollar.
The rupee fell 19 percent in 2018, making it one of the worst-performing currencies in Asia, according to Refinitiv data, due to heavy
Coomaraswamy on Thursday said the sharp depreciation was a powerful “pro-growth inducement” for the country’s exports.
The rupee has declined 4.7 percent since a political crisis started in October. That crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans.
A series of credit rating downgrades have made it harder for Sri Lanka to borrow as it faces record high repayments.
The Colombo Stock Index ended 0.02 percent weaker at 5,988.07 yesterday. The benchmark index lost 5 percent in 2018.