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Sri Lanka rupee moves in second day after reduced intervention

ECONOMYNEXT – Sri Lanka’s rupee appreciated as much as 137.10/25 levels after opening at 137.50/138.00 on the second day of reduced intervention as the central bank moves to float the currency.

The rupee closed around 137.50/138.00 Friday after falling to 139.00 after the Central Bank allowed the currency move in line with its loose monetary policy.

Over the course of the year, the central bank had released liquidity or printed outright around 400 billion rupees and lost over a third of its gross foreign reserves.

On Monday the rupee strengthened as exporters sold some dollars. There was forward selling where dollars were generated through a synthetic swap, dealers said.

The rupee weakened to 137.80/90 in late trading amid stronger demand.

Rupee liquidity in money markets also went up to 61 billion rupees from 51 billion, from an earlier dollar purchase, showing that the rupee is not floating and both monetary and exchange rate policy is still weighted against the currency, and float is still to take hold, analysts say (Colombo/Sept07/2015)

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