Reuters: The rupee hit a new record low of 125.20 on Thursday as a lack of dollar liquidity amid importer demand ahead of the April festive season, depreciated the currency further, dealers said.
The rupee recovered to close at 125.10/30 a dollar, down from Wednesday’s close of 124.40/60. Three dealers Reuters spoke to said the highest trade was done at 125.20.
“It will have a freefall for the moment without any concrete inflows,” said a currency dealer on condition of anonymity.
Analysts expect the rupee to recover in April on declining dollar demand and expected exporter conversions.
On Thursday, Economic Development Minister Basil Rajapaksa said the currency would stabilise.
“The Government doesn’t want to intervene. We are confident that the rupee will stabilise and I can’t say any number on that. But it will be a fair number for both importers and exporters,” Rajapaksa told reporters in Colombo.
The rupee has depreciated 8.7 per cent since the Central Bank on 9 February stopped defending a specific exchange rate. A Reuters monthly forex poll has forecast the rupee to fall as far as 128.50 by the end of August.
The stock market meanwhile fell to a three-week low as investors stayed away on negative sentiment due to slower economic growth forecasts and fears of high interest rates.
The main share index fell 0.39 per cent or 20.87 points to 5,397.20, lowest since 21 February.
The day’s turnover was Rs. 418.9 million ($ 3.36 million) well below last year’s daily average of Rs. 2.3 billion. Volume was Rs. 14.2 million. Last year’s daily average was a record Rs. 102.7 million.
Foreign investors bought shares worth Rs. 94.8 million, extending the offshore net foreign inflow to Rs. 3.22 billion so far this year, after a net outflow of Rs. 19.1 billion last year.
The Colombo Bourse is one of the worst performers this year among Asian markets, with a 11.15 per cent loss.
source - www.ft.lk
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