The Sri Lankan rupee ended weaker on Wednesday as banks bought dollars on behalf of state-run Ceylon Petroleum Corp, which stocked up crude ahead of an expected fuel price hike, dealers said.
The spot rupee ended at 153.50/60 per dollar, edging down from Tuesday’s close of 153.43/48.
“State banks were buying dollars mainly for oil imports. As the fuel price is expected to rise soon, there is a dollar demand for oil imports. We also saw some demand from construction-related imports,” said a currency dealer who requested anonymity.
“Going forward, we see imports to pick up with year-end seasonal demand.”
Crude prices are expected to rise in the country after private fuel retailer Lanka IOC informed local media it is likely to increase rates as they have been selling at a loss.
The rupee has been under pressure since January after the central bank stopped defending the currency and started buying the dollar to build the country’s depleted foreign currency reserves.
The island nation saw 20.4 billion rupees ($132.99 million) of net inflows into equities this year as of Wednesday’s close, and 31.1 billion rupees worth inflows into government securities as of Oct. 4, official data showed.