Friday, November 18, 2016

Sri Lankan rupee edges down on capital outflow fears

Nov 18, 2016 (Reuters) – The Sri Lankan rupee fell on Friday on persistent worries of capital outflows as incoming President Donald Trump’s policies are seen aiding higher U.S. interest rates and a strong dollar.

Rupee forwards were active, with the spot-next trading at 148.70/95 per dollar, compared with Thursday’s close of 148.65/75.

“The rupee is pressured although there is on and off dollar selling. Some foreign banks are buying dollars,” said a currency dealer requesting anonymity.

“It looks there would be a U.S. Federal Reserve rate hike in December and the market is bracing for further fall in the rupee.”

Dealers said exporters were reluctant to sell dollars due to global concerns and uncertainties within the Sri Lankan market following the national budget, which has proposed a revision of corporate and withholding taxes.

Foreign investors might pull out of emerging markets, including Sri Lanka, if the Fed raises interest rates next month, they added.

The rupee is under pressure as foreign investors exited government securities due to new taxes proposed in the budget, dealers said.

Foreign investors net sold government securities of 34.2 billion rupees ($231.08 million) in the four weeks ended Nov. 9, data from the central bank showed.

Sri Lankan shares were largely flat, with the benchmark Colombo stock index up 0.03 percent at 6,345.95 as of 0536 GMT. Turnover was 56.5 million Sri Lankan rupees($382,402.71).

 

No comments:

Post a Comment