COLOMBO: The Sri Lankan rupee ended slightly weaker in thin trade on Friday as many investors have still not returned from their holidays, dealers said. The rupee currency closed at 144.15/25 per dollar, edging down from Thursday's close of 144.10/20.
"The market is illiquid. Just one or two small deals took place as most investors are still on holidays," said a currency dealer asking not to be named.
The rupee hit a record low of 144.25 per dollar in intraday trade on Wednesday as speculation that the currency would weaken further weighed ahead of the central bank's rate decision later in the day. The rupee has fallen 6.5 percent since the central bank allowed a free float of the rupee on Sept. 4, and is expected to weaken further in 2016 due to lower reserves and higher imports, currency dealers say.
Economists say the government's loose monetary and fiscal policies have contributed to the steep fall, with private sector credit recording 26.3 percent growth in October year on year, compared to 13.9 percent in March.
Currency dealers said the market is still pricing in the impact of the central bank's decision to raise statutory reserve ratio (SRR) to 7.5 percent with effect from Jan. 16 in its monetary policy meeting held on Wednesday.
Central bank Governor Arjuna Mahendran on Thursday said the rupee would stabilise when exports start to pick up next year, but uncertainty will prevail if the US Federal Reserve goes for another rate hike in March.
Commercial banks parked 124.9 billion rupees ($870.4 million) of surplus liquidity on Friday using the central bank's deposit facility at 6 percent, official data showed.
The island nation suffered a net outflow of 153.4 billion rupees from foreign holdings in government securities in 2015, the latest data showed.
Comments
Comments are closed.