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Sri Lankan rupee hits record low on importer dollar demand

COLOMBO, Nov 9 (Reuters) – The Sri Lankan rupee hit a record low on Monday due to higher importer dollar demand while moral suasion by the central bank prevented any further decline, dealers said.

The rupee fell 0.28 percent to an all-time low of 141.95 per dollar before recovering slightly to trade at 141.85/95 as of 0530 GMT. The previous all-time low of 141.50 was hit on Friday.

"With the latest U.S. jobs data, there is a high possibility of a Fed rate hike soon. So, the pressure on the rupee will continue," said a currency dealer asking not to be named.

"We thought the currency will gain against the U.S. dollar with the inflow from the recent $1.5 billion bond. But it’s weakening."

Now that the United States is closing in on full employment and inflation is likely to rise to target levels, the "next step" should be to start gradually increasing rates, a top U.S. central banker said on Saturday.

In Sri Lanka, investors are waiting for more clarity on economic policies from the 2016 budget announcement, scheduled on Nov. 20.

Dealers said they have not seen a significant gain in the currency after last month’s $1.5 billion sovereign bond issue.

Sri Lanka borrowed $1.5 billion via a 10-year sovereign bond sale on Oct. 27 at a 6.85 percent yield, down from an initial guidance of about 7 percent.

Sri Lanka’s main stock index was 0.04 percent weaker at 7,056.39 at 0612 GMT. Turnover was 117.2 million rupees ($825,642.83). (Colombo/November 09 2015)
 

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