January 18, 2018 / 12:15 PM / 7 months ago

Sri Lanka rupee ends down on importer dollar demand in dull trade

COLOMBO, Jan 18 (Reuters) - The Sri Lankan rupee closed slightly weaker on Thursday as importer dollar demand surpassed mild greenback sales by exporters in dull trade, dealers said.

The spot rupee ended at 153.85/95, compared with Wednesday’s close of 153.75/95.

“It was a dull day. Remittances were quite dull and the imports were not that significant,” said a currency dealer.

The rupee might witness volatility with the government’s heavy debt repayment this year, said dealers.

Sri Lanka aims to raise $500 million this month via development bonds, the central bank said last week, as the government faces unprecedented debt repayment this year.

President Maithripala Sirisenea’s administration must repay an estimated 1.97 trillion rupees ($12.85 billion) in 2018 - a record high - including $2.9 billion of foreign loans, and a total of $5.36 billion of interest.

The currency fell 2.5 percent last year and 3.9 percent in 2016.

The central bank, while announcing its key economic policies for the year on Jan. 3, said it has allowed more flexibility in determining the exchange rate based on the present market conditions.

It added intervention policies will be adopted consistent with a flexible exchange rate regime and supportive of improving foreign exchange market functionality, and maintaining a competitive exchange rate will be an important objective. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

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