COLOMBO: The Sri Lankan rupee ended slightly weaker on Tuesday due to dollar demand from importers on fears that US President-elect Donald Trump's policies would lead to a rise in rates and the greenback.
Foreign investors might pull out of emerging markets, including Sri Lanka, if the Fed raises interest rates next month, dealers said.
Rupee forwards were active, with spot-next forwards ending at 148.60/70 per dollar, compared with Monday's close of 148.55/65.
"The pressure was there today, (importer) demand was also there and not lot of conversions happened," said a currency dealer requesting anonymity.
The International Monetary Fund (IMF) released the second tranche of loan worth $162.6 million under its $1.5 billion loan programme, and said the country's macro-economic and financial conditions had begun to stabilise.
The pressure on the rupee is now expected to ease with investors awaiting actions from the central bank after the IMF loan money flows in, dealers said.
The central bank on Friday revised the spot rupee reference rate to 147.95 per dollar from 147.75.
The spot rupee was hardly traded on Tuesday, but was quoted at 148.00/149.00.
The rupee has been under pressure as exporters were reluctant to sell dollars due to global concerns and uncertainties in the Sri Lankan market following the national budget, which has proposed a revision in corporate and withholding taxes.
The rupee is also under pressure as foreign investors exit government securities due to the new taxes proposed in the budget, dealers said.
Foreign investors net sold government securities worth 37.12 billion rupees ($250.81 million) in the five weeks ended on Nov. 16, data from the central bank showed.
Comments
Comments are closed.