Sri Lanka rupee opens slightly weaker in forex markets
ECONOMYNEXT – Sri Lanka rupee was quoted slightly weaker at 139.80/90 to the US dollar in the spot forex market, Tuesday, only slightly down yesterday’s closed, dealer said.
The rupee opened wide at 139.75/140.00 to the US dollar after closing at 139.80/85 levels Monday, where a state bank sold dollars as the spot rate touched 139.90/95 levels.
Importers were taking a breather and watching the market after a 50 cent fall yesterday and nearing the 140 rupee psychological level, dealers said.
Sri Lanka’s currency is under pressure from tens of billions of money printed by the Central Bank to keep interest rates down despite higher state spending and borrowing.
Last week about 24 billion rupees was printed to repay maturing state debt. Past experience has shown that printed money hits forex markets within a 4-6 week period and pushes up domestic prices, analysts who have watched previous balance of payments crises closely say.
Sri Lanka’s credit driven car imports have risen amid low lending rates and deposit rates that discourage savings in a symptom of the loose monetary policy and outright money printing by the Central Bank to finance the budget deficit.
Over the last three months about 150 billion rupees have been printed by the Central Bank. (Colombo/Sept15/2015)