Sri Lankan rupee edges down on importer dollar demand; stocks up

Nov 23, 2016 (Reuters) – The Sri Lankan rupee fell slightly on Wednesday due to dollar demand from importers on fears that U.S. President-elect Donald Trump’s policies would lead to a rise in rates and the greenback.

Foreign investors might pull out of emerging markets, including Sri Lanka, if the Fed raises interest rates next month, dealers said.

Rupee forwards were active, with spot-next forwards at 148.65/75 per dollar as of 0620 GMT, compared with Tuesday’s close of 148.60/70.

The International Monetary Fund (IMF) released the second tranche of loan worth $162.6 million under its $1.5 billion loan programme, and said the country’s macro-economic and financial conditions had begun to stabilise.

The downward pressure on the rupee is now expected to ease with investors awaiting actions from the central bank after the IMF loan money flows in, dealers said.

The central bank on Friday revised the spot rupee reference rate to 147.95 per dollar from 147.75.

The spot rupee was hardly traded on Wednesday, but was quoted at 148.20/95.

The rupee has been under pressure as exporters were reluctant to sell dollars due to global concerns and uncertainties in the local market following the national budget, which has proposed a revision in corporate and withholding taxes.

The rupee is also under pressure as foreign investors exit government securities due to the new taxes proposed in the budget, dealers said.

Foreign investors net sold government securities worth 37.12 billion rupees ($250.81 million) in the five weeks ended on Nov. 16, data from the central bank showed.

Sri Lankan shares were marginally firmer with the benchmark Colombo stock index up 0.06 percent at 6,259.76 as of 0626 GMT. Turnover was 117.04 million rupees ($789,743.59).