The Sri Lankan rupee ended weaker on Monday in light trade, hovering near a record low hit in the previous session, as importer dollar demand surpassed inward remittances, dealers said. Exporters were reluctant to sell dollars on expectation of a further fall in the local currency, they added. The rupee ended at 143.20/35 per dollar compared with Friday's close of 143.15/25. On Friday, the rupee fell as much as 0.31 percent to an all-time low of 143.30 per dollar, surpassing the previous record of 143.15 hit on Thursday.
"The remittances were there, but the rupee ended weaker as the sellers were selling at higher rates and due to high importer (dollar) demand," said a currency dealer, asking not to be named. Global political risk research firm Eurasia group last week said political infighting and populist policies are likely to slow down implementation of the budget's economic liberalisation measures.
Sasha Riser-Kositsky of Eurasia in a research note said Sri Lanka's 2016 budget highlights the government's weak commitment to fiscal consolidation and will leave its external accounts position vulnerable. The rupee has dropped around 8.4 percent so far this year and 5.9 percent since the central bank allowed free-float on September 4, Thomson Reuters data showed. Dealers said the central bank had still been intervening through moral suasion after it had intervened in the market to check the fall in the rupee. Officials at the Central Bank of Sri Lanka were not available for comment. The central bank sold dollars worth a net $277.95 million in October and $523.80 million in September, latest data showed. Dealers said part of that money was spent to defend the rupee.
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