Sri Lankan rupee drops to near six-month low on equity outflows
COLOMBO, June 21 (Reuters) – Sri Lanka’s rupee hit a more than six-month low in early trade on Friday on dollar demand for equity-related transactions, but late exporter selling of the greenback helped the currency to hold ground, dealers said.
The rupee hit 129.00/10 per dollar, its lowest since Dec. 4, but recovered to end at 128.90/95, falling 0.4 percent from Thursday’s close of 128.43/47.
Some foreign investors also booked forwards to hedge their exposure, amid a trend of foreign outflows in other Asian peers in the wake of a rise in U.S. Treasury yields.
“Some investors made forward booking for equity-related outflows before exporters sold dollars, which prevented further depreciation,” a currency dealer said on condition of anonymity. “There is still depreciation pressure on the rupee.”
The rupee fell 0.33 percent this week, after losing 1.6 percent last week, which currency dealers attributed to foreign investors selling debt as part of a broader selloff in emerging markets.
The local currency has weakened 1.1 percent so far this year, following a 10.7 percent depreciation in 2012 as the central bank opted for a flexible exchange rate regime in February 2012.
Sri Lanka’s main stock index fell to a near seven-week low as some foreign investors cashed in their risky Sri Lankan assets while retail investors took profits.
The bourse ended 0.9 percent, or 56.17 points, weaker at 6,155.27, its lowest since May 6 on concerns of a possible pullout by more foreign funds.
The market witnessed net foreign inflows of 167.5 million rupees ($1.31 million) on Friday, extending net foreign buying in shares to 16.2 billion rupees so far this year.
The day’s turnover was at 565 million rupees, around half of this year’s daily average of 1.02 billion rupees. ($1 = 128.3500 Sri Lanka rupees)
Our Central banks is not in proper shape, the decision they take along with the world economy is not in sync. We need proper agenda and vision. It’s not should be for a short period. Cannot get decisions as a company or a business body, this is a country. Hope will go for better.