COLOMBO Dec 19 The Sri Lankan rupee slipped on
Monday on mild importer dollar demand, as the market braced for
declines in the local currency with the central bank raising the
spot reference rate following a hike in U.S. interest rates,
The U.S. Federal Reserve raised interest rate by 25 basis
points on Wednesday and signalled a faster pace of increases in
2017 as central bankers adapted to the incoming Donald Trump
administration's promises of tax cuts, spending and
Rupee forwards were active with spot-next forwards at
149.55/60 per dollar at 0806 GMT, compared with Friday's close
"There was importer dollar demand today, while we did not
see usual year-end exporter sales," said a currency dealer,
asking not to be named.
On Thursday, the central bank increased the spot reference
rate by 30 cents to 149.10, a day after raising it by 10 cents.
The spot rupee was hardly traded on Monday, but was quoted
Asian shares slipped to four-week lows as the prospect of
higher U.S. interest rates and a strong dollar stemming from the
incoming Trump Administration's purported policies of cutting
taxes and spending heavily threatened to suck capital out of
As higher U.S. yields shore up the dollar, the dollar's
index against a trade-weighted basket of six major currencies
jumped to a 14-year high of 103.56 last week, though it
gave up some gains to profit-taking on Monday.
The rupee usually rises in December ahead of Christmas and
New Year due to remittances from expatriates, but dealers said
the currency was expected to face pressure this time due to
higher dollar demand from importers following the Fed rate hike.
Analysts expect some capital outflow as the immediate
reaction to the Fed rate hike and are also concerned over the
government's foreign borrowing cost rising in the short term.
Foreign investors net sold 52.3 billion rupees ($350.77
million) worth of government securities in the eight weeks ended
Sri Lankan shares were down 0.22 percent at 6,254.91,
their lowest since Dec. 1, as of 0816 GMT.
Stockbrokers said Prime Minister Ranil Wickremesinghe's
order to reverse and probe the sale of 7 percent stake in Selman
Bank by state-owned Bank of Ceylon weighed
Turnover stood at 249.2 million rupees ($1.67 million).
($1 = 149.1000 Sri Lankan rupees)
(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)