Tuesday, April 24, 2012

Sri Lanka rupee hits new record low on importer dlr demand

(Reuters) - Sri Lanka's rupee fell to a record 132.20 against the dollar on Tuesday as importers bought the U.S. currency on expectations of further weakening after the central bank decided to stop supplying dollars to meet oil bills from May.

"The highest trade was done at 132.20 a dollar though there is only thin volume of importer dollar demand," a currency dealer said on condition of anonymity.

"Many importers are trying to buy dollars before it depreciates further. Once the oil bills are financed from the market, we expect the rupee to depreciate more. Exporters are also not converting their dollars due to this uncertainty."

Four more dealers confirmed the rupee trading at 132.20, breaking the previous record of 131.60 reached on March 19.

On Friday, Central Bank Governor Ajith Nivard Cabraal said there was no need to intervene in the market, despite heavy depreciation pressure on the rupee, as the country would see $574 million of inflows within a month.

The central bank, which is building up its depleted reserves, has said it may stop supplying dollars to pay for oil imports from May, its latest move to allow more rupee flexibility after it refrained from intervening in foreign exchange markets in February.

The currency has depreciated 13.5 percent since the central bank stopped intervening to defend a specific price on Feb. 9 and 16.6 percent from Nov. 21, when the government allowed 3 percent devaluation. (Reporting by Shihar Aneez; Editing by Ramya Venugopal)

source - www.reuters.com

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