Sri Lanka's rupee ended 1 percent weaker on Tuesday, due to dollar demand as importers purchased the greenback after the local currency gained nearly 3 percent last week. The rupee closed at 178.20/50 per dollar, compared with Friday's close of 176.60/177.00, market sources said. Markets were closed on the island nation's independence day on Monday.
Rupee posted a weekly gain of 2.8 percent last week as exporters converted dollars and foreign investors purchased government securities after an IMF statement and government's $1 billion debt repayment boosted confidence.
The International Monetary Fund (IMF) on Jan. 16 said it would resume discussions in February for further disbursal of part of a $1.5 billion loan.
The currency has appreciated 2.5 percent so far this year.
Investor confidence in Sri Lanka is stabilising after the country repaid a $1 billion sovereign bond in mid-January, Central Bank of Sri Lanka Governor Indrajit Coomaraswamy said last week.
Worries over heavy debt repayment after a 51-day political crisis that resulted in a series of credit rating downgrades dented investor sentiment as the county is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months.
Fitch Solutions Macro Research, a subsidiary under Fitch Group on Thursday downgraded its average forecast for the rupee to 186.00 per US dollar for this year and 192.00 in the next year, from 177.00 and 183.00 respectively.
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