Sri Lanka rupee rebounds from 141.33 to dollar in forex market

ECONOMYNEXT – Sri Lanka’s rupee rebounded to 141.24/40 levels after weakening to 144.33 to the US dollar in spot forex markets in intra-day trade Friday, dealers said.

The rupee opened around 141.20/40 to the US dollar and weakened Thursday and saw support from a private bank that sold dollars.

Sri Lanka’s rupee has come under pressure from a combination of loose monetary and fiscal policy which also spooked foreign investors amid global uncertainty.

The Central Bank ended daily ceiling for the spot US dollar on September 04 and reduced overt interventions in the interbank market.

But reserve data shows reserve outflows are continuing with backdoor interventions with liquidity being injected through debt monetization either before or after such sales, analysts say.

Analysts had warned that partial dollar interventions in forex markets and full sterilization in money markets is the most dangerous for the rupee. (Colombo/Oct02/2015)

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