Sri Lankan rupee eases on importer dollar demand; stx up

rupee

Dec 01, 2016 (Reuters) – The Sri Lankan rupee eased slightly on Thursday due to importer dollar demand in dull trade on fears that economic policies of U.S. President-elect Donald Trump may lead to a rise in the greenback and trigger foreign fund outflows.

Dealers see the rupee being under pressure till seasonal inward remittances begin and on expected inflows including the $200 million after the swap agreement with China Development Bank.

Rupee forwards were active while spot-next forwards were trading at 149.00/10 per dollar at 0510 GMT, compared with Wednesday’s close of 148.90/149.00.

“Today there is demand (for dollars) but trade is dull,” said a currency dealer, asking not to be named.

The spot rupee was hardly traded, but was quoted at 148.40/149.20.

Dealers said the currency has been under pressure on fears Trump’s economic policies might lead to a rise in the dollar and trigger foreign fund outflows.

Foreign investors have net sold 38.93 billion rupees ($262.69 million) worth of government securities in the six weeks ended Nov. 23, ahead of an expected Fed rate hike in December.

Oil prices and energy shares swept higher on Thursday after OPEC agreed to cut crude output to clear a glut, while the dollar and bond yields rose sharply on prospects that resulting inflationary pressures will lead to higher interest rates.

Sri Lankan shares were trading higher with the benchmark Colombo stock index up 0.27 percent at 6,257.98 as of 0514 GMT. Turnover stood at 380.1 million rupees ($2.56 million).

The market had shrugged off the central bank’s key monetary policy decision on Tuesday to keep rates unchanged.