BUSINESS

Sri Lankan rupee hits record low for 12th straight session

Reuters

Reuters – The Sri Lankan rupee hit a record low for a 12th straight session on Wednesday, tracking weakness in emerging markets stocks and currencies while rising demand for the greenback from importers also weighed.

The rupee touched 162.25 per dollar as currencies and stocks in emerging markets were pressured on news that South Africa had slipped into recession and concerns about inflation in Turkey and the Philippines.

The rupee closed at 162.20/30 per dollar, compared with Tuesday’s close of 161.95/162.05.

“Until the dollar rally is over, we will see the same trend of depreciation (in the rupee),” said a dealer who requested anonymity. “This is predominantly externally driven. The regional currencies are also in a falling trend with oil prices on the rise. It makes sense for exporters to hold in dollars until the rupee touches the bottom.”

Sri Lanka will not intervene in the foreign exchange market and the government will leave the level of the rupee for market forces to decide, state finance minister Eran Wickremaratne told Reuters on Tuesday. The currency has so far weakened 0.5 percent this month, following a 1.2 percent decline in August. It is down 5.8 percent this year.

The rupee will be under depreciation pressure with the year-end seasonal importer dollar demand, dealers said. The Sri Lankan currency is also hurt by weakness in the Indian rupee. India is Sri Lanka’s biggest trading partner and the Indian rupee, which also hit a record low on Wednesday, has been one of the worst performers in Asia this year.

Foreign investors bought government securities worth a net 578.3 million rupees ($3.58 million) in the week ended Aug. 29, marking the first week of net buying since April. However, they have net sold 46.9 billion rupees worth of securities so far this year, central bank data showed. ($1 = 161.5000 Sri Lankan rupees)

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