February 19, 2018 / 12:43 PM / a year ago

Sri Lankan rupee falls on importer dollar demand

COLOMBO, Feb 19 (Reuters) - The Sri Lankan rupee edged down on Monday on importer dollar demand, while political uncertainty continued to weigh on investor sentiment, dealers said.

The rupee ended at 155.40/50 per dollar, compared with Friday’s close of 155.10/20. The rupee hit a record low of 155.90 on Wednesday.

“Exporters were reluctant to sell (dollar) due to political uncertainty,” a dealer said, asking not to be named.

Prime Minister Ranil Wickremesinghe’s centre-right United National Party (UNP) and President Maithripala Sirisena’s centre-left Sri Lanka Freedom Party (SLFP) were routed by a party backed by former President Mahinda Rajapaksa in local polls on Feb. 10, plunging the government into crisis.

Since the results, both parties have locked horns on how best to continue in the government. Sirisena’s party wants to form its own government, his party ministers have said, while Wickremesinghe’s party has said it is in the process of forming its own government.

Wickremesinghe, addressing the media on Friday said that the government will continue with a reshuffle of the cabinet.

The local currency has weakened 1.3 percent so far this year. The domestic currency lost 2.5 percent last year and 3.9 percent in 2016.

The currency is expected to be pressured by continued demand for dollars from importers, dealers said.

Dealers also said they expect a gradual depreciation in the rupee and higher volatility this year on account of debt repayments by the government.

Sirisena’s administration must repay an estimated 1.97 trillion rupees ($12.68 billion) in 2018 - a record high - including $2.9 billion of foreign loans and a total of $5.36 billion in interest.

Foreign investors sold government securities net worth 2.1 billion rupees in the week ended Feb. 14, central bank data showed. ($1 = 155.4000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

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