April 23, 2009 (LBO) – Sri Lankan tea prices rose sharply at this week’s auctions, propelled by the weakening of the rupee against the dollar and lower quantities, brokers said. They said prices of low grow teas, which make up the bulk of the crop, gained substantially although those from the higher elevations fell because of lower quality.
“The market for Low Growns took an upward turn at this week’s auction and prices gained for most varieties of tea,” Asia Siyaka Commodities said in a report.
In the Large Leaf catalogues select OP1 varieties of tea gained substantially, while others too went up by 10 – 20 rupees a kilo.
“The appreciation of the US dollar against the Sri Lanka rupee yesterday enhanced the purchasing power of exporters and the additional demand for Middle Eastern destinations, especially Iran contributed to these price increases,” the brokers said.
The rupee has fallen sharply in recent days and has sunk below 120 to the dollar after the central bank stopped intervening in the foreign exchange market ahead of an IMF bail out and aggressive interest rate cuts.
The main markets for low grown teas are in the Middle East and Russia.