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Sri Lankan rupee edges down on importer dollar demand; stx up
November 29, 2016 / 8:31 AM / 10 months ago

Sri Lankan rupee edges down on importer dollar demand; stx up

COLOMBO, Nov 29 (Reuters) - The Sri Lankan rupee traded marginally weaker on Tuesday, hurt by dollar demand from importers amid fears that economic policies of U.S. President-elect Donald Trump may lead to a rise in the greenback and trigger foreign fund outflows.

The market shrugged off the central bank’s key monetary policy decision on Tuesday to keep rates unchanged. Dealers said investors are yet to digest the impact of the decision.

At the post-monetary policy media briefing, central bank Governor Indrajith Coomaraswamy said aggressive monetary policy tightening by the U.S. Federal Reserve will have an impact on the foreign outflow.

Foreign investors have net sold 38.93 billion rupees ($262.69 million) worth government securities in the six weeks ended Nov. 23 ahead of an expected Fed rate hike in December.

The U.S. dollar took a breather on Tuesday as global bonds steadied from their recent rout, while equities flatlined as political risk resurfaced in Europe ahead of a referendum in Italy this weekend.

Sri Lankan rupee forwards were active, while spot-next forwards were trading at 149.25/35 per dollar at 0806 GMT, compared with Monday’s close of 149.20/40.

“The demand is there and the supply is also there. But the (importer) pressure is more,” said a currency dealer, asking not to be named.

Dealers expect the trend to continue till the end of the month before the seasonal inward remittances start coming in.

The spot rupee was hardly traded, but was quoted at 148.50/149.20.

The rupee has been under pressure as exporters have been reluctant to sell dollars due to uncertainties in the local market following the national budget, which proposed a revision in corporate and withholding taxes.

The currency has also faced pressure due to net selling of government securities by foreign investors after new taxes were proposed in the budget, dealers said.

Sri Lankan shares were steady, with the benchmark Colombo stock index up 0.01 percent at 6,229.25 as of 0808 GMT. Turnover stood at 790.7 million rupees ($5.31 million).

$1 = 149.0000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan

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