November 16, 2017 / 11:53 AM / a year ago

Sri Lankan rupee rises on exporter dollar conversion

COLOMBO, Nov 16 (Reuters) - The Sri Lankan rupee closed higher on Thursday, helped by exporter dollar conversions, but expectations of higher seasonal imports and a pickup in motor vehicle buying after taxes were slashed in last week’s budget weighed on the local currency, dealers said.

The spot rupee, which touched a low of 153.88 per dollar in early trade, closed at 153.60/75 per dollar, compared with Wednesday’s close of 153.75/85.

“When the rupee touched 153.88 level, exporters started to convert dollars. There was a market correction also after two days of falls,” a currency dealer said requesting anonymity.

“But we expect the currency to fall given rising importer dollar demand with the upcoming year-end festive season.”

The market also expects the currency to be under pressure with people importing more lower-end vehicles on which the government reduced taxes in the budget.

The government imposed new taxes on high-end motor vehicles, telecoms, banks and liquor in a bid to boost revenues, in its 2018 budget outlined last week, as the budget deficit for the current year slipped to 5.2 percent of GDP.

The rupee has slipped 2.7 percent so far this year.

Foreign investors had invested a net 19.7 billion rupees ($128.3 million) in equities this year as of Thursday’s close, and 44.3 billion rupees in government securities as of Nov. 8, official data showed. ($1 = 153.6000 Sri Lankan rupees) (Reporting by Shihar Aneez)

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