The Sri Lankan rupee hit a record low on Wednesday as panicked importers bought US dollars following the defeat of the two ruling coalition parties in a local election, but late selling in the greenback by exporters capped the fall.
The ruling coalition government of President Maithripala Sirisena's centre-left Sri Lanka Freedom Party and Prime Minister Ranil Wickremesinghe's centre-right United National Party suffered defeats in a local election over the weekend, sparking political uncertainty.
The results have raised concerns over the future of the unity government amid pressure from the opposition parties to dissolve the parliament. The rupee, which traded at a record low of 155.90 during the day, ended at 155.40/50 per dollar, compared with Monday's close of 154.95/155.05 per dollar. It surpassed previous closing low of 155 hit on Monday.
The markets were closed for a public holiday on Tuesday. "Panic buying by importers and exporters' hesitance to sell dollars in early trade resulted in the fall. But during the latter part of the day we saw some exporter selling," said a currency dealer.
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