Sri Lanka rupee falls to new historic low in forex markets
ECONOMYNEXT – Sri Lanka’s rupee closed at 140.15/30 against the US dollar Tuesday in the spot forex market, sliding to a new historic low, dealers said.
The rupee fell as low as 140.25 in intra-day trade, down from yesterday’s close of 139.80/85 percent.
The rupee is under pressure from over 86 billion rupees of excess liquidity generated by money printing as well as dollar occasional dollar purchases by the monetary authority.
Blunt interventions to maintain a soft-peg to the US dollar ended on September 04 after foreign reserves fell 34 percent over a year when the rupee was 134.75 to the US dollar in the spot market.
A falling rupee, and the inflationary nominal revenue gains that comes to the state may allow the current administration to finance a deficit in the budget, analysts say.
A falling rupee also destroys the real value to rupee debt and bank deposits. However dollar denominated debt is protected. (Colombo/Sept15/2015)