March 14, 2018 / 12:13 PM / 4 days ago

Sri Lankan rupee hits all-time low on importer dollar demand

COLOMBO, March 14 (Reuters) - The Sri Lankan rupee touched its all-time low on Wednesday as importer dollar demand surpassed mild selling of the greenback by exporters, dealers said.

The rupee touched an intraday low of 155.90 per dollar, matching the all-time low hit on Feb. 14, before closing at 155.85/95, compared with Tuesday’s close of 155.70/75.

“There was importer (dollar) demand. We have seen some foreign banks were also buying dollars. Exporter dollar conversions were very thin,” said a currency dealer.

“We won’t see much exporter conversions until late March.”

The rupee has weakened 1.56 percent so far this year after declining 2.5 percent last year and 3.9 percent in 2016.

It is expected to be pressured by continued importer demand for dollars ahead of the traditional New Year in April, dealers said.

A gradual depreciation in the rupee and higher volatility this year are expected on account of debt repayments by the government, they added.

The International Monetary Fund on Friday said Sri Lanka’s economy remains vulnerable to adverse shocks due to its large public debt and low external buffers.

The government must repay an estimated 1.97 trillion rupees ($12.68 billion) in 2018 - a record high - including $2.9 billion of foreign loans and a total of $5.36 billion in interest.

Foreign investors sold government securities worth a net 3.2 billion rupees in the week ended March 7, central bank data showed.

Dealers also said a communal violence in the central district of Kandy weighed on sentiment.

Police said on Friday they were investigating whether 10 suspected ringleaders of a wave of attacks on Muslims by Sinhalese Buddhists had outside funding or foreign help.

After five days of violence, police said the situation has calmed down and the curfew lifted since Saturday in Kandy. ($1 = 155.6500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

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