Sri Lanka currency falls to record low

moneyThe Sri Lankan rupee fell to a record low of 143.25 per dollar on Friday, on track for its sixth straight session of declines on importer demand for the greenback amid lower dollar liquidity.
Exporters were also reluctant to sell dollars on expectation the local currency could fall further, dealers said.

The rupee fell as much as 0.28 percent to an all-time low of 143.25 per dollar, surpassing the previous record of 143.15 hit on Thursday. The rupee was trading at 143.20/35 per dollar at 0600 GMT, compared with Thursday’s close of 143.15/25.

“Importer demand is there but very reluctant (dollar) sales. It’s confusing and I don’t know to what level this (rupee) will fall,” said a currency dealer.

Global political risk research firm Eurasia group said political infighting and populism measure are likely to slow down implementation of the budget’s economic liberalization measures.
“Sri Lanka’s 2016 budget highlights the government’s weak commitment to fiscal consolidation and will leave its external accounts position vulnerable,” Sasha Riser-Kositsky of Eurasia said in a research note.

On Tuesday, the central bank left the key interest rates steady at record lows for a seventh straight month. Capital Economics said risk in the financial sector is mounting with continued acceleration in credit growth while inflation is on the rise. The rupee has dropped around 8.4 percent so far this year and 5.9 percent since the central bank allowed free-float on Sept. 4, Thomson Reuters data showed.

Dealers said the central bank had still been intervening through moral suasion after it had intervened in the market to check the fall in the rupee. Officials at the Central Bank of Sri Lanka were not available for comment.

The central bank sold dollars worth a net $277.95 million in October and $523.80 million in September, latest data showed. Dealers said part of that money was spent to defend the rupee.
Sri Lanka’s main stock index .CSE was up 0.07 percent at 6,968.53 at 0549 GMT, edging up from its four-and-a-half month closing low hit in the previous session. Turnover was 171.9 million rupees ($1.20 million).(Arab News)

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