Sri Lanka's Rupee appreciates to Rs.191.5 against the USD: reserves decline sharply

COLOMBO (News1st): Sri Lanka's Rupee has strengthened to Rs.191.5 against the US Dollar despite the sharp fall of reserves, amid foreigners exiting from government securities, Central Bank data showed. The Sri Lanka Rupee weakened to a record low of Rs. 200.46 against the US dollar on April 8th, but has since reversed the trend. The sharp depreciation of the rupee currency in early April led Sri Lanka’s finance ministry to impose import restrictions on several items such as rice, flour, sugar, liquor, apparel products vehicles and non-essential items to keep the exchange rate and balance of payment crisis under control and prevent the rupee from sliding further. During the year up to the 06th May 2020, Sri Lanka's Rupee depreciated against the US dollar by 3.9 percent, Central Bank data showed. Foreign investors continue to exit from the government securities and the Central Bank data showed that foreign investors sold Rs.949.4 million (3.93 per cent) worth of government securities during the week ending 5th May 2020. Since the first week of March this year, foreigners have sold approximately Rs.60 billion worth of government securities, due to week investor sentiments owing to the global outbreak of COVID-19. T-bills and T-bonds held by foreigners, which stood at Rs. 83 billion by the first week of March, has witnessed a massive decline of approximately 70% to Rs.23 billion as of the 5th of May. The cumulative outflow from the local bond market since the 1st of January this year is now approximately Rs.80.792 Billion. T-bills and T-bonds held by foreigners, which stood at Rs.104 Bn as of the 1st of January this year, have declined by nearly 77.7% to Rs.23.2 billion as of May 5th. Sri Lanka's gross official reserves have dropped by 353 million dollars to 7.18 billion dollars from 7.53 billion dollars in March. Gross official reserves which was at 7.64 billion dollars as of 31st December 2019 has declined by 462.5 million dollars so far this year. Sri Lanka's trade balance in 2019 was a negative of Rs.7.9 Bn, Central Bank data showed.