Sri Lankan rupee ends firmer on bank dollar sales

The Sri Lankan rupee ended slightly firmer on Wednesday as exporter dollar sales outweighed importer demand for the greenback on hopes that political stability would resume after coalition partners agreed to continue with a cabinet reshuffle.

The rupee ended at 155.10/20 per dollar, compared with Tuesday’s close of 155.45/55. The rupee hit a record low of 155.90 last week.

“There was some selling by foreign banks which helped the rupee to end firmer,” a dealer said.

Prime Minister Ranil Wickremesinghe and Secretary of President Maithripala Sirisena-led party on Wednesday told the parliament that the unity government of their parties will continue, easing political uncertainty that hurt sentiment last week.

Wickremesinghe’s centre-right United National Party (UNP) and Sirisena’s centre-left Sri Lanka Freedom Party (SLFP) were routed by a party backed by former President Mahinda Rajapaksa in local polls on Feb. 10, putting the government into a crisis.

The local currency has weakened 1.3 percent so far this year. The domestic currency lost 2.5 percent last year and 3.9 percent in 2016.

The currency is expected to be pressured by continued importer demand for dollars, dealers said.

Dealers added they expect a gradual depreciation in the rupee and higher volatility this year on account of debt repayments by the government.

Sirisena’s administration must repay an estimated 1.97 trillion rupees ($12.68 billion) in 2018 – a record high – including $2.9 billion of foreign loans and a total of $5.36 billion in interest.

Foreign investors sold government securities net worth 2.1 billion rupees in the week ended Feb. 14, central bank data showed.

(Reuters)