REUTERS: The Sri Lankan rupee was slightly weaker yesterday on importer dollar demand and in line with declines in emerging market currencies that fell on investor fears that higher US interest rates under incoming President Donald Trump would spark capital outflows from those markets.
The weakness in the rupee also followed Sri Lanka’s budget proposals on Thursday to revise corporate and withholding taxes to boost revenue and cut the 2017 fiscal deficit to 4.6 percent of the gross domestic product (GDP) from this year’s 5.4 percent.
Dealers also said a high-tax regime could put some pressure on the rupee.
Rupee forwards were active, with spot-next forwards trading at 148.30/50 per dollar at 0526 GMT, compared with Friday’s close of 148.00/10. One-week forwards were at 148.50/65 per dollar, weaker from Friday’s close of 148.20/30.
Markets were closed on Monday for a Buddhist religious holiday.
“The importer demand is there after the long weekend,” a currency dealer said requesting anonymity.
“Globally, the dollar is strengthening.”
The US dollar hovered near a 14-year high yesterday and Treasury yields extended their rise as investors braced for higher inflation in the United States amid expectations of fiscally expansionary polices under Donald Trump’s presidency.
Sri Lankan shares were marginally higher, with the benchmark Colombo stock index up 0.06 percent at 6,419.28 as of 0530 GMT. Turnover stood at Rs.231.1 million.