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Rupee eases on importer dollar demand; stocks up

4 December 2015 03:18 am - 0     - {{hitsCtrl.values.hits}}

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REUTERS - The Sri Lankan rupee traded slightly weaker yesterday to hover near its record low as importer dollar demand surpassed inward remittances, dealers said.
Prime Minister Ranil Wickremesinghe on Wednesday warned of pressure on the currency due to a China-led global slowdown and a possible Federal Reserve rate hike ahead of elections in the United States.
“We have got to remember that there will be pressure on our currencies and there’ll be an increase in financial market volatility as far as we are concerned,” he said at a ceremony marking 30 years of the formal establishment of the Colombo Stock Exchange.
The rupee was trading at 143.25/28 per dollar, compared with Wednesday’s close of 143.22/27, and not far from an all-time low of 143.30 hit on Friday.
“The (import) demand is still there, the remittances are there for festive season but the importer demand is still higher,” said a currency dealer, asking not to be named.
Dealers said inward remittances for the festival season would ease the pressure on the local currency in the short term.
Sri Lanka is to seek an IMF stand-by arrangement to fend off a risk that its economy will be hurt next year by repercussions from events affecting major economies.
Global political risk research firm Eurasia group last week said political infighting and populist policies are likely to slow down implementation of the budget’s economic liberalisation measures.
Sasha Riser-Kositsky of Eurasia in a research note said Sri Lanka’s 2016 budget highlights the government’s weak commitment to fiscal consolidation and will leave its external accounts position vulnerable.
The rupee has dropped around 8.4 percent so far this year and 5.9 percent since the central bank allowed free-float on Sept. 4, Thomson Reuters data showed.
The Central Bank sold dollars worth a net $277.95 million in October and $523.80 million in September, latest data showed. Dealers said part of that money was spent to defend the rupee.
Sri Lanka’s main stock index was 0.18 percent up at 6,875.26 at 0533 GMT. Turnover was Rs. 203.6 million ($1.42 million). 
 

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