May 9, 2018 / 12:32 PM / 10 months ago

Sri Lankan rupee edges down to near record low; cbank intervenes - dealers

COLOMBO, May 9 (Reuters) - The Sri Lankan rupee closed slightly weaker on Wednesday with the central bank selling dollars at 157.70 to 157.80 rupees per dollar to select banks to arrest further fall, dealers said.

The rupee closed at 157.80/95 per dollar, compared with Tuesday’s close of 157.60/80.

The currency hit an all-time low of 157.90 per dollar on May 2. It has declined 0.2 percent so far this month after a 1.5 percent fall in April.

“Today the central bank was not that aggressive. The demand for dollars was there,” a currency dealer said, asking not to be named. “The emerging markets currencies are also under pressure.”

Officials at the Central Bank of Sri Lanka were not immediately available for comments.

The euro slid to a new 2018 low on Wednesday as more investors bet on the dollar rising because of relatively higher interest rates, while concerns about the U.S. exit from an international nuclear deal with Iran also supported the greenback.

The rupee will stabilise and the monetary authority will intervene to smooth high volatility as there is no reason for a weaker currency, Nandalal Weerasinghe, senior deputy governor at the central bank, said last week.

The central bank said on April 26 it would intervene to support the rupee when necessary and that there was no reason for the rupee to be under pressure given the country’s record $10 billion foreign currency reserves.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the government.

Foreign investors sold government securities worth a net 5.7 billion rupees ($36.20 million) in the week ended May 2, bringing the outflow so far this year to 5.8 billion rupees, central bank data showed. ($1 = 157.4500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Gopakumar Warrier)

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