COLOMBO, March 6 The Sri Lankan rupee ended
marginally weaker in thin trade on Monday, as importer dollar
demand surpassed greenback remittances, dealers said.
Rupee forwards were active, with two-week forwards
ending at 151.85/95 per dollar, compared with Friday's close of
"The importer demand was largely taken care by remittances
in thin trade today," said a currency dealer on condition of
"If we don't get to see steady inflows, the rupee will be
under pressure due to seasonal import demand and drought."
Dealers said the rupee would be under pressure due to dollar
demand from importers ahead of the traditional Sinhala-Tamil New
Year in mid-April, and as foreign investors continue to sell
Ratings agency Moody's said in a report last week that lower
agricultural exports and higher imports to make up for the loss
in domestic production would weigh on the current account
deficit and foreign exchange reserves.
The government's handouts to farming families affected by
drought could make the fiscal deficit target a challenge,
Lower agricultural output due to the drought will force the
government to increase imports, dealers said. For further
imports, the government needs more U.S. currency while there
will be fewer dollars coming in from agriculture commodity
exports. Both will increase the demand for the greenback and put
pressure on the rupee.
Finance Minister Ravi Karunanayake said on Friday the worst
drought to hit Sri Lanka in 40 years may cost the government up
to 40 billion rupees ($264.7 million), but should not worsen the
Foreign investors bought a net 701 million rupees ($4.64
million) worth of government securities in the week ended March
1, recording the first weekly net inflow for the year. They have
sold a net 63.76 billion rupees such instruments so far this
Sri Lanka could face balance-of-payments pressure due to
foreign outflows from government securities, a government
document showed last month, even as the island nation was in the
process of raising up to $2.5 billion from foreign
The rupee has weakened around 1 percent so far this year. It
fell 3.9 percent last year, following a 10 percent drop in 2015.
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by