The Sri Lankan rupee fell on Tuesday as importer dollar demand outweighed selling by exporters, even as traders awaited more confirmation that political stability was returning after coalition partners agreed to continue with a cabinet reshuffle. The rupee ended at 155.45/55 per dollar, compared with Monday's close of 155.40/50. The rupee hit a record low of 155.90 on Wednesday. "The (importer dollar) demand was there and the exporters were reluctant to sell (dollar)," a dealer said.

Prime Minister Ranil Wickremesinghe on Friday said the government will continue with a cabinet reshuffle after his and President Maithripala Sirisena's parties were routed in local polls, plunging the government into a crisis. The coalition parties of the government met over cabinet meeting on Tuesday and said the unity government will continue. The local currency has weakened 1.3 percent so far this year. The domestic currency lost 2.5 percent last year and 3.9 percent in 2016.

The currency is expected to be pressured by continued demand for dollars from importers, dealers said. Dealers added they expect a gradual depreciation in the rupee and higher volatility this year on account of debt repayments by the government. Sirisena's administration must repay an estimated 1.97 trillion rupees ($12.68 billion) in 2018 - a record high - including $2.9 billion of foreign loans and a total of $5.36 billion in interest. Foreign investors sold government securities net worth 2.1 billion rupees in the week ended February 14, central bank data showed.

Copyright Reuters, 2018