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Rupee at record low on importer dollar demand

Rupee at record low on importer dollar demand

Reuters: The rupee hit an all-time low of 160.96 per dollar on Friday, dragged down by importer dollar demand and less dollar inflows, dealers said.

The rupee closed at 160.85/161.00 per dollar, compared with Thursday’s close of 160.73/83.

The local currency surpassed its earlier record of 160.82 hit in the previous session. The rupee declined 0.9% so far this month, and 4.9% so far this year.

“The demand (for dollars) was there today as well. There weren’t many remittances due to the Hajj festival holiday. I believe there will be pressure (on the currency to depreciate) on Monday as well,” a currency dealer said, requesting anonymity.

The rupee will be under depreciation pressure with the year-end seasonal importer demand, dealers said.

Absence of dollar conversions by exporters and outflows from equities pushed the rupee lower, said analysts.

Foreign investors sold shares worth a net Rs. 888.8 million ($ 5.54 million) in the five sessions through Tuesday. Exporters are holding on to dollars as they expect the local currency to decline further, dealers said.

The currency was also hurt by declines in the Indian rupee, as India is Sri Lanka’s biggest trading partner. The Indian rupee, which hit a record low on 16 August, is the region’s worst-performing currency this year.

Central Bank Governor Indrajit Coomaraswamy told reporters, after holding key monetary policy rates steady, that several emerging market currencies had declined more than the Sri Lankan rupee, adding that “if we reduce rates, that would put further pressure on the exchange rate”.

Foreign investors sold government securities worth a net Rs. 818 million in the week ended 15 August, bringing the outflow so far this year to Rs. 3.99 billion, Central Bank data showed.

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