26 May 2018 12:01 am
REUTERS: The Sri Lankan rupee ended steady yesterday with dollar buying by a foreign bank and importers weighing on the local currency, while exporters stayed on the sidelines expecting the rupee to weaken further in line with other emerging market currencies.
A possible slump in the country’s top agriculture export, tea, due to heavy rains also weighed on the sentiment.
Heavy monsoon rains have killed 16 people, prompting authorities to warn against landslides and floods in low-lying areas after spill gates had to be opened across the Indian Ocean island.
The spot rupee ended little changed at 158.15/25 per dollar, compared with Thursday’s close of 158.15/20.
“There was some demand from importers as well as from a foreign bank and we have seen some inward remittances too,” a currency dealer said.
Dealers expect lower dollar inflows from tea exports to weigh on the currency, apart from debt repayments by the government, and see the rupee falling between 4 percent and 5 percent this year.
However, senior central bank Deputy Governor Nandalal Weerasinghe had said earlier this month that debt repayments by the government will not have an impact on the currency as they are managed with borrowed money externally.
The rupee hit an all-time low of 158.50 per dollar on May 16. The currency has declined 0.2 percent so far this month after a 1.5 percent fall in April. It has fallen 2.9 percent this year.
The pressure on the currency is unwarranted as gross external reserves are at US$9.1 billion and the real effective exchange rate indexes indicate that the currency is competitive, the central bank said last week.
Foreign investors sold government securities worth a net Rs.5.97 billion (US$ 37.81 million) in the week ended May 16, bringing the outflow so far this year to Rs.15.8 billion, Central Bank data showed.