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Rupee ends steady

Rupee ends steady

Reuters: The Sri Lankan rupee ended steady yesterday as dollar demand from foreign banks offset selling of the greenback by domestic lenders on account of inward remittances, traders said.

The rupee, which traded at Rs. 159.85 per dollar during the day, ended steady at 159.75/85 per dollar from Thursday’s close. It has fallen 4.04% so far this year and had hit a record low of 160.17 on 20 June.

“Today we have seen some demand from foreign banks. There were sizable (inward) remittances today, which helped absorb the pressure,” said a currency dealer, asking not to be named.

The Central Bank left its key policy rates unchanged yesterday before market hours, saying the decision backed its goals for stabilising inflation and fostering sustainable economic growth.

“Several emerging market currencies have depreciated over 4%, more than the rupee, and if we reduce rates, that would put further pressure on the exchange rate,” Central Bank Governor Indrajit Coomaraswamy told reporters.

Sri Lanka has raised import duties on small hybrid cars by more than 50%, the Government said on Wednesday, aiming to boost revenue and curb a sharp fall in the rupee.

The Finance Ministry imposed a minimum duty of Rs. 1.25 million on any hybrid car with an engine capacity of less than 1,000 cubic centimetres to discourage the imports which has pressurised the rupee currency.

Coomaraswamy had earlier said the rupee’s decline was driven mainly by factors outside Sri Lanka.

Foreign investors sold government securities worth a net Rs. 4.6 billion ($ 28.83 million) in the week ended 25 July, bringing the outflow so far this year to Rs. 36.2 billion, Central Bank data showed.

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