COLOMBO, Aug 17 (Reuters) - The Sri Lankan rupee closed weaker and near its all-time low on Friday due to importer dollar demand and foreign outflows from equities and government securities, dealers said.
Absence of dollar conversions by exporters and remittances also pushed the rupee down. Dealers said there were fears it could depreciate further, tracking weakness in emerging-market currencies globally.
The rupee touched its record low of 160.55 per dollar in early trade on Friday before closing at 160.45/55, compared with Thursday’s close of 160.35/50, and has declined 4.6 percent so far this year.
“There was importer dollar demand. Foreign banks bought dollars due to foreign exit from government securities and the stock market,” a currency dealer said.
“There were some inflows from remittances. But they were not enough to meet the dollar demand. We expect the downward pressure to remain until emerging market currencies settle.”
Sri Lanka’s stock market has suffered an 829 million-rupee outflow in the last three sessions.
Exporters are holding on to dollars as they expect the local currency to decline further, the dealer said.
Most Asian currencies firmed on Friday as the Turkish lira recovered and investors scanned the horizon for cues from Sino-U.S. negotiations.
But the Sri Lankan market is also concerned about the Indian rupee’s fall, as India is Sri Lanka’s biggest trading partner. India’s is the region’s worst performing currency this year, and hit a record low on Thursday as worries about a widening trade deficit soured sentiment.
Indian markets were closed for a holiday on Friday.
Sri Lanka’s central bank governor, Indrajit Coomaraswamy, told reporters this month after holding key monetary policy rates steady that several emerging-market currencies had declined more than the Lankan rupee, adding that “if we reduce rates that would put further pressure on the exchange rate”.
Foreign investors sold government securities worth a net 818 million rupees ($5.1 million) in the week ended Aug. 15, bringing the outflow so far this year to 3,991 billion rupees, central bank data showed. ($1 = 160.3500 Sri Lankan rupees) (Reporting by Shihar Aneez; Editing by Subhranshu Sahu and Andrew Roche)