The Sri Lankan rupee ended stronger on Thursday on exporter dollar conversions and inward remittances, as Prime Minister Ranil Wickremesinghe surviving a no-confidence motion boosted sentiment, dealers said. Wickremesinghe won a no-confidence vote in parliament late on Wednesday as a majority of legislators voted to support his coalition government but the instability caused may damage its reform agenda. The win eased concerns over the political uncertainty of a possible government change, and investors bought longer tenure bonds on Thursday, dealers said.
Sri Lanka's central bank unexpectedly cut its key lending rate by 25 basis points on Wednesday, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty. The rupee, which traded at 155.30 per dollar earlier in the session, closed 0.3 percent firmer at 155.50/60 per dollar, compared with Wednesday's close of 155.80/95. The rupee gained 0.4 percent last week.
"Exporter dollar conversions to pay salaries ahead of festival and inward remittances helped rupee gain. The importer dollar demand has eased," said a currency dealer. "There were demand for longer tenure bonds like 10-year t-bonds after the no-conffidence vote ended yesterday. The central bank governor, after the policy rate announcement on Wednesday, said if the inflation rate can be maintained between 4-5 percent, the depreciation in the rupee would be around 2-3 percent.
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