April 26, 2018 / 11:58 AM / a year ago

Sri Lankan rupee extends losses, hits fresh all-time closing low

COLOMBO, April 26 (Reuters) - The Sri Lankan rupee weakened to a record closing low on Thursday as dollar demand from importers and banks surpassed the exporter greenback sales, dealers said.

The rupee closed at 157.75/95 against the dollar on Thursday, weakening further from its previous record low of 157.60/75 hit on Wednesday.

The rupee has fallen 0.9 percent so far this week and 1.4 percent this month.

“There were some (dollar) conversions by exporters. But the demand was high from importers and also some foreigners selling (government) securities,” a currency dealer said.

Some dealers said dollar purchases by oil importers, who usually buy dollars from banks, weighed on the currency.

The rupee has weakened 2.7 percent so far this year. It dropped 2.5 percent last year and 3.9 percent in 2016.

The International Monetary Fund said last week that the central bank should continue to remain vigilant in guarding against inflationary pressures, “while continuing to build reserves and supporting greater exchange rate flexibility”.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the government.

Foreign investors sold government securities worth a net 1.8 billion rupees ($11.5 million) so far this year through April 18, central bank data showed. ($1 = 156.7500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

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