COLOMBO, March 2 The Sri Lankan rupee traded
weaker on Thursday as importer dollar demand surpassed greenback
sales by exporters, dealers said.
Rupee forwards were active with two-week forwards
trading slightly weaker at 151.80/90 per dollar at 0749 GMT,
compared with Wednesday's close of 151.70/80. They rose in the
past four sessions.
"Today we can see some (importer) demand," said a currency
dealer, on condition of anonymity.
Moody's in a report said lower agricultural exports and
higher imports will make up for the loss in domestic production.
The drought will weigh on Sri Lanka's current account deficit
and foreign-exchange reserve buffers, while the government's
handouts for farming families could make the fiscal deficit
target a challenge.
Lower agricultural output due to severe 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.
The rupee is also 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 government
securities, dealers stated.
Sri Lanka's fuel imports in January jumped to double typical
monthly levels, with the country rushing to plug an energy
shortfall as severe drought hits its hydropower output, industry
Foreign investors sold a net 15.37 billion rupees ($101.62
million) in the week ended Feb. 22, extending the outflow from
government securities to 64.5 billion rupees.
Sri Lanka could face balance-of-payments pressure due to
foreign outflows from government securities, a government
document showed last week, 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.
Sri Lankan shares were down 0.11 percent at 6,114.96,
as of 0803 GMT. Turnover was 640.2 million rupees ($4.23
($1 = 151.2000 Sri Lankan rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry