Nov 11, 2016 (Reuters) – The Sri Lankan rupee edged down on Friday, in line with a selloff in emerging market currencies, as investors feared higher U.S. interest rates under incoming President Donald Trump will spark capital outflows from those markets.
The weakness in the rupee followed Sri Lanka’s budget proposals on Thursday to revise corporate and withholding taxes to boost revenue and cut the 2017 fiscal deficit to 4.6 percent of GDP from this year’s 5.4 percent.
However, currency dealers said it was too early to see the real impact of the national budget, but a high-tax regime could put some pressure on the currency and support high interest rates.
Rupee forwards were active, with spot-next forwards trading at 148.00/10 per dollar at 0706 GMT, compared with Thursday’s close of 147.
buy clomid online buy clomid online no prescription
One-week forwards were at 148.20/30 per dollar, weaker from Thursday’s close of 148.00/10.
“Dollar demand is building up,” a currency dealer said requesting anonymity. “Globally the dollar is strengthening.”
Foreign outflows also weighed on the currency sentiment, as foreign investors net sold 24.5 billion rupees ($165.6 million) worth of government securities in the three weeks ended Nov. 2, data from the central bank showed.
Sri Lankan shares were marginally higher, with the benchmark Colombo stock index up 0.08 percent at 6,426.10 as of 0709 GMT. Turnover stood at 83.3 million rupees ($564,745.76).
“Overall (the budget) looks positive… but investors are awaiting clarity on proposals,” said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.