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Rupee closes near record low

Rupee closes near record low

Reuters: The rupee declined on Tuesday and closed above its record low hit last week, while intervention by the central bank limited the fall, market sources said.

Prime Minister Ranil Wickramasinghe said on Monday the government would take measures to impose taxes to curb imports by $ 500 million to $ 1 billion to face the currency crisis.

The rupee closed at 168.90/169.00 per dollar, compared with Friday’s close of 168.50/70. Markets were closed on Monday for a holiday.

The rupee fell to an all-time low of 169.00 per dollar on Friday, in an eight-session record-setting spree.

The Central Bank will intervene aggressively to curb excess volatility in the exchange rate, Senior Deputy Governor Nandalal Weerasinghe had told Reuters on Friday.

Exporters expect the rupee to be under pressure due to continued importer dollar demand and less exporter dollar sales.

The rupee has weakened 4.5% so far this month after a 1.2% drop last month, and has declined 9.9% so far this year.

Globally, currency markets were mostly quiet as investors watched from the side lines before the Fed meeting. The dollar slipped 0.12%, but stayed above two-month lows hit at the end of last week.

An illiquid market for dollars, dollar buying by foreign banks to facilitate bond outflows and importer demand weighed on the currency, said the sources.

The rupee will be under pressure due to year-end seasonal dollar demand from importers, dealers have said earlier.

The currency has also been hurt by recent weakness in the Indian rupee. India is Sri Lanka’s biggest trading partner and the Indian rupee, which hit a record low on 18 September, is Asia’s worst performing currency this year.

Foreign investors sold government securities worth a net Rs. 8.8 billion ($ 52.19 million) in the week ended 19 September, its highest weekly outflow since the week ended 6 December. Sri Lanka has suffered a net outflow of Rs. 63.7 billion in securities so far this year, Central Bank data showed.

CSE falls to near 5-year closing low on foreign selling Reuters: Shares fell over 1% yesterday to their lowest close in nearly five years, as foreign investor selling, a weaker rupee and government plans to curb imports hurt investor sentiment.

Prime Minister Ranil Wickremesinghe said on Monday the government would take measures to impose taxes to curb imports by $ 500 million to $ 1 billion to face the currency crisis. The rupee hit a record low for an eighth straight session on Friday despite the central bank’s intervention. It fell to an all-time low of 169.00 per dollar on Friday, weighed down by importer demand for the scarce US currency.

The rupee has weakened 4.5% so far this month after a 1.2% drop last month, and has declined 9.97% so far this year.

Analysts said the acceleration in the rupee’s depreciation was creating panic among investors.

The Colombo stock index declined 1.21% to 5,833.58 on Tuesday, its lowest close since 18 December 2013. This was also the sharpest single-day drop since late November 2017.

“It’s another disastrous day, lots of exits happened. It’s mainly because of panic selling, that’s why the market came down sharply in lower turnover,” said Dimantha Mathew, head of research at broker First Capital Holdings.

Turnover was Rs. 297.6 million ($ 1.77 million), the lowest since 6 September, and less than half of this year’s daily average of Rs. 793.5 million.

Foreign investors sold a net Rs. 60.9 million worth of shares on Tuesday, extending the year-to-date net foreign outflow to Rs. 5.6 billion worth of equities.

Analysts said the recent fuel price hike also hurt investor confidence as it could hit corporate earnings. Fuel retailers raised gasoline and diesel prices earlier this month for a third time in four months due to higher global oil prices and a weaker rupee.

Investors are awaiting cues from the national budget in November.

Shares of Ceylon Tobacco Company Plc fell 1.5%, Hemas Holdings Plc lost 4.3%, Sri Lanka Telecom Plc ended 5.7% down and conglomerate John Keells Holdings Plc closed 1.1% lower.

 

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