COLOMBO: Sri Lankan rupee edged up on Friday as banks sold dollars with subdued importer dollar demand due to measures taken by the government to discourage vehicle imports, dealers said.
Last week, the government imposed a 100 percent margin on letters of credit for motor vehicles to discourage unnecessary imports, in a move to prevent dollar outflows and further weakening of the rupee currency.
The government had also changed the method to calculate customs duties on imported vehicles. The Customs Director General will now determine customs duties based on the prices furnished by the vehicle manufacturers and not on the actual transacted free-on-board value of the vehicle.
Vehicle Importers’ Association said on Thursday the new method will increase prices of imported vehicles.
The rupee was slightly firmer at 140.30/40 per dollar by 0713 GMT compared with Thursday’s close of 140.45/50.
“The pressure is not there because it’s a Friday and some banks were selling (dollar),” said a currency dealer asking not to be named.
Some dealers also said dollar demand from importers is reducing ahead of the government’s budget in November and some new measures to discourage unnecessary imports.
The rupee hit a record low of 141.40 per dollar on Sept. 28, but has recovered over the past few days due to bank dollar sales which followed dollar selling by a state-run bank.
Sri Lanka’s main stock index was 0.16 percent or 11.26 points firmer at 7,096.91 at 0629 GMT. Turnover was 656.6 million Sri Lankan rupees ($4.69 million).
