Rupee hits all-time low, exporters see further decline

REUTERS: The Sri Lankan rupee hit a fresh record low of 158.90 per dollar yesterday, as importer dollar demand offset the lack of greenback sales by exporters who expect the currency to drop further, dealers said. 

The spot rupee hit an all-time low of 158.90 per dollar, surpassing its previous low of 158.80 hit in the previous session. 

The currency ended at 158.85/10 per dollar, weaker from Wednesday’s close of 158.75/90. The currency declined 3.5 percent so far this year. 

“Nobody is selling dollars. Importer dollar demand was there. The rupee is trading weaker due to low liquidity,” a currency dealer said. 

“Some banks were looking to buy dollars, but there were no sellers. The currency is under pressure and the central bank is also letting a gradual depreciation.” 
Dealers said the rupee will be under pressure, with exporters staying on the sidelines in anticipation of a fall in the unit, in line with other emerging market currencies. 
Dealers expect the rupee to trade between 162-163 level by the end of the year. 

However, the central bank had said the pressure on the currency is unwarranted as gross external reserves are at US$9.1 billion and the real effective exchange rate indexes indicate that the currency is competitive. 

Foreign investors sold government securities worth a net Rs.787.24 million (US$4.96 million) in the week ended May 30, bringing the outflow so far this year to Rs.17 billion, Central Bank data showed.