COLOMBO Dec 30 The Sri Lankan rupee
fell 3.9 percent in 2016, with the spot currency reference rate
hitting a record low on Friday, as higher imports and private
sector credit as well as lower export earnings weighed on the
currency throughout the year.
Rupee forwards were active, with one-month forwards
closing flat at 150.75/85 per dollar as unusual year-end
importer dollar demand was offset by dollar selling late in the
day by banks, ahead of an announcement on monetary policy by the
central bank, dealers said.
One-week forwards, spot-next forwards and the spot rupee
were hardly traded, dealers said.
On Friday, the central bank raised the spot currency
reference rate to a record low of 150.00. The banking regulator
has raised the spot reference rate by a total 50 cents this
week. That followed a 40 cents increase in the spot reference
rate in each of the previous two weeks amid sustained pressure
on the currency.
Officials from the central bank were not immediately
available for comment.
Sri Lanka's central bank is most likely to keep its key
interest rates steady on Friday, even as some economists expect
further tightening to ease pressure on the rupee following a
rate increase by the U.S. Federal Reserve earlier this month, a
Reuters poll showed.
Dealers said the market was bracing for some depreciation in
the rupee in January after the central bank said last week that
depreciation of the currency was not necessarily negative for
"We still see the rupee under pressure. Going into the new
year, inflows from borrowing could help ease the pressure," a
currency dealer said on condition of anonymity.
Sri Lanka intends to raise up to $1 billion via foreign
currency term financing facility to finance the import elements
of development projects specified in the 2017 budget, the
government said on Wednesday.
(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)