POSTED AT 03:01 PM 07-02-2019
Rupee ends firmer on exporter dollar sales
Image Courtesy: Onlanka News
REUTERS: Sri Lanka’s rupee rose 0.3% on Wednesday due to exporter dollar sales, while a trade union action at customs dampened importer demand for the greenback.
The rupee closed at 177.70/178.00 per dollar, compared with Tuesday’s close of 178.20/50, market sources said.
The rupee posted a weekly gain of 2.8% last week as exporters converted dollars and foreign investors purchased government securities after a statement from the International Monetary Fund (IMF) and the Government’s $1 billion debt repayment boosted confidence.
The IMF on 16 January said it would resume discussions in February for further disbursal of part of a $1.5 billion loan.
The currency has appreciated 2.8% so far this year.
The Colombo Stock Index ended 0.41% weaker at 5,957.41 on Wednesday, its lowest close since 23 January. Stocks declined 1% in January, and ended lower for a fifth straight session.
Turnover was Rs. 249.2 million ($1.40 million), less than a third of last year’s daily average of Rs. 834 million.
Foreign investors net sold Rs. 6.8 million worth shares on Wednesday. They have been net sellers of Rs. 2.8 billion worth of stocks so far this year, and Rs. 16.1 billion since the political crisis began on 26 October, 2018.
The bond market saw inflows of Rs. 924.7 million in the week ended 30 January, the latest Central Bank data showed.
Sri Lankan customs officers on Tuesday called off a strike that left 6,000 containers stranded at the country’s main port and put pressure on food prices, after the Government agreed to reinstate their boss for three months. The strike by thousands of officials began a week ago in protest at the sacking of Director General PSM Charles, who authorities blamed for a drop in customs revenue last year.
Investor confidence in Sri Lanka is stabilising after the country repaid a $1 billion sovereign bond in mid-January, Central Bank of Sri Lanka Governor Indrajit Coomaraswamy said last week.
Worries over heavy debt repayment after a 51-day political crisis that resulted in a series of credit rating downgrades dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months.
Fitch Solutions Macro Research, a subsidiary under Fitch Group, on Thursday downgraded its average forecast for the rupee to 186.00 per U.S. dollar for this year and 192.00 for 2020, from 177.00 and 183.00 respectively.
The rupee dropped 16% in 2018, and was one of the worst-performing currencies in Asia due to heavy foreign outflows.
The political crisis had dented investor sentiment and delayed Sri Lanka’s borrowing plans. Sri Lanka was plunged into political turmoil when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved Parliament. Wickremesinghe was later reinstalled as premier. A court ruled the dissolution was unconstitutional.