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Sri Lankan rupee falls; flood damage assessment awaited
May 30, 2017 / 11:26 AM / 6 months ago

Sri Lankan rupee falls; flood damage assessment awaited

COLOMBO, May 30 (Reuters) - Sri Lankan rupee fell on Tuesday as floods and landslides that killed over 190 people weighed on market sentiment, with investors awaiting further information on the impact of the disaster, analysts said.

The extent of the damage due to the floods is yet to be assessed, with Sri Lanka’s main agricultural exports - tea and rubber - hit by the worst torrential rains in 14 years.

Authorities warned of more rains and landslides on Tuesday as cyclone “Mora” formed in the Bay of Bengal.

The floods would have an adverse impact on agricultural exports, putting pressure on the rupee, currency dealers said, while analysts said there could be an immediate negative impact on the hospitality and manufacturing sectors.

Rupee forwards were active on Tuesday, with spot-next forwards ending at 152.95/153.00 per dollar, compared with Monday’s close of 152.80/95.

“The demand (for dollars) was there and (dollar) conversions were very less,” said a currency dealer.

The floods could also put pressure on the overall GDP and government budget deficit with high infrastructure spending, dealers said.

The rupee has been under pressure after the central bank governor on May 18 said the bank would allow gradual depreciation of the currency, they said.

The spot rupee did not trade on Tuesday.

The central bank fixed the spot rupee reference rate at 152.50 on May 5.

Foreign investors bought a net 14.6 billion rupees ($95.61 million) worth of government securities in the two weeks ended May 24. They have sold a net 42.1 billion rupees worth of securities so far this year. ($1 = 152.5000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

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