: Sri Lanka’s rupee currency hit a record low of 121.30/50 on Monday due to importer dollar demand, as the central bank stayed away in line with its new policy against intervening to defend a specific price, currency dealers said.
The rupee fell 1.1 per cent on Monday from on Friday’s close of 119.90/120.00, as exporters stayed away from the market in anticipation of further depreciation, while some importers booked forwards to avoid losses if the rupee falls further.
“You just can’t stop this depreciation unless the central bank raises interest rates further,” a currency dealer said on condition of anonymity.
The central bank raised policy rates for the first time since Feb.2007 to cool down the economy after the island nation saw a record high trade deficit and 16-year high credit growth.
Most dealers expect the currency to slide to around 125-130 a dollar by end of this year. Sri Lanka’s main share index lost 1.61 per cent or 89.71 points to 5,476.59, as profit-taking ended a streak of 11 positive sessions.
“The fall is due to profit-taking, but a number of investors have complained they can’t access the system via Internet after the stock exchange upgraded its trading system,” said Prashan Fernando, CEO at Acuity Stockbrokers. The bourse upgraded the trading system on Friday.
The index slipped in neutral territory on Monday with the 14-day Relative Strength Index dropping to 49.350 from on Friday’s 52.232, Reuters data showed.
The Colombo bourse is one of the worst performers this year among Asian markets, with a 9.84 per cent loss while the majority have had positive returns.
Foreign investors were net buyers of shares worth 224.2 million Sri Lanka rupees ($1.87 million) on Monday, extending the net foreign inflow to 3.16 billion rupees so far this year, after net outflows of 19.1 billion last year.
The day’s turnover was 616.1 million rupees. Last year’s average turnover was 2.3 billion. The day’s volume was 21.2 million shares, compared to last year’s record daily average of 102.7 million.
Sri Lanka’s exports topped $10 in 2011 growing at above 20 per cent, a threshold achieved only on eight occasions since 1951, which exporters have reached for two years running.