Sri Lankan rupee falls on importer dollar demand; dealers see more pain ahead
Posted on February 22nd, 2017
Courtesy Nasdaq
COLOMBO, Feb 22 (Reuters) – The Sri Lankan rupee ended weaker on Wednesday on importer dollar demand as local traders bought the U.S. currency as a precaution amid concerns of a steep depreciation in the rupee in the absence of central bank intervention, dealers said.
Rupee forwards <SLKR> were active with two-week forwards ending at 153.40/70 per dollar, after hitting a low of 153.65 during the day, weaker than Tuesday’s close of 152.70/90.
They have fallen 1.04 percent so far this week. “Importers are trying to buy dollars as they expect a sharp fall in the currency due to a lack of central bank intervention.
Exporters are not selling dollars and are waiting to see the bottom,” said a currency dealer, requesting not to be named. “There is some panic at the moment. We have seen a sharp depreciation since Feb. 2 and it has created panic. I don’t see central bank doing anything to prevent the sharp fall.” The apex bank’s decision to not intervene in the market was in contrast to its governor Indrajit Coomaraswamy’s comment early this month.
He said the bank was not planning to abruptly stop supporting the rupee. The rupee will fall further because of seasonal importer demand until the traditional Sinhala-Tamil new year in mid-April, another dealer said.
The currency fall comes even as a mission from the International Monetary Fund (IMF), which has asked the central bank to maintain a flexible exchange rate, is in Colombo for the second review of a $1.5 billion loan.
The currency is under pressure due to foreign outflows from government securities. Foreign investors have net sold $325.70 million worth of securities in the seven weeks to Feb. 15, surpassing the total net foreign outflow of $324.3 million in 2016, according to the latest central bank and government data. Sri Lanka could face balance-of-payments pressure due to foreign outflows from government securities, a government document showed on Thursday, even as the island-nation is in the process of raising up to $2.5 billion from foreign borrowing. [nL4N1G14B2]
Finance Minister Ravi Karunanayake said last week that protecting a fragile rupee was more important than controlling interest rates as the local currency tended not to rebound after depreciating. [nL4N1FZ4QL] The rupee has weakened 1.3 percent so far this year, under pressure from rising imports and net selling of government securities by foreign investors. It fell 3.9 percent last year, following a 10 percent drop in 2015. ($1 = 151.1500 Sri Lankan rupees)
February 22nd, 2017 at 3:38 pm
SLR will be 170 rupees for the dollar after the APRIL NEW YEAR.
Buy US dollars people! It will save your money. Otherwise on April 16 you will realise your money is worth less than what it was a day ago.
BUY US$!
BUY US$!
BUY US$!
BUY US$!
BUY US$!
Or suffer loss. ALL MPs have already converted all their savings into US$.
February 22nd, 2017 at 3:42 pm
By the end of the year 1$ = 175 rupees
By the end of next year 1$ = 200 rupees
Put all your savings in $$$s if you can SLs or lose them.
UNABLE to control the economy, Karunkaya is also planning an Endian style withdrawal of the 2,000 and 1,000 rupee notes WITHOUT warning. Save you money. BUY $s.