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Sri Lankan rupee steady, seen weakening on flood woes
May 31, 2017 / 6:02 AM / 6 months ago

Sri Lankan rupee steady, seen weakening on flood woes

COLOMBO, May 31 (Reuters) - Sri Lankan rupee traded steady on Wednesday amid expectations that the currency would weaken, as recent floods and landslides that killed over 200 people dented market sentiment, dealers said.

The extent of the damage is yet to be assessed, with Sri Lanka’s main agricultural exports - tea and rubber - hit by the worst torrential rains in 14 years due to the 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. Analysts said hospitality and manufacturing sectors are likely to be the worst-hit industries during the floods.

Rupee forwards were active on Wednesday, with spot-next forwards trading at 152.95/153.10 per dollar at 0530 GMT, largely unchanged from Tuesday’s close of 152.95/153.00 per dollar.

“The demand (for dollars) is still there, and a few exporter conversions were seen. But we haven’t seen much activities. There has been very little inflows of dollars,” 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 Wednesday.

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.

Sri Lankan shares were up 0.19 percent at 6,667.64, as of 0540 GMT. Turnover stood at 68.4 million rupees ($448,525).

$1 = 152.5000 Sri Lankan rupees Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips

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