Sri Lanka rupee falls to new historic low of 143 to the US dollar
ECONOMYNEXT – Sri Lanka’s rupee fell to a new historic low of 143 to the US dollar, dealers said as the monetary authority continued to print money and undermine the national currency.
The rupee was quoted at 142.95/143.05 in late trading Tuesday after opening at 142.70/143.00 levels.Business was done as low as 143.00 to the US dollar
At least week Treasury bill auction 10 billion rupees were printed, driving excess liquidity up to 145 billion rupees from 138 billion a week earlier.
Unless the Central Bank is willing to mop up the rupees by selling dollars, the currency can collapse further.
However this week the Central Bank accepted bids from the market which can minimize fresh money printing.
Central Bank Governor Arjuna Mahendran said Monday there was no need to tighten monetary policy.
Sri Lanka has said it is creating a ‘competitive exchange rate’ a strategy used in the 1980s to bust the currency, boost low wage exports but which can generate labour unrest.
The currency is busted as taxes are hiked in the budget. (Colombo/Nov24/2015)