Sri Lanka rupee steady amid intervention

COLOMBO (EconomyNext) – Sri Lanka’s rupee was steady at 133.90 to the US dollar in the spot market Friday with a state bank that usually acts for the monetary authority selling dollars for trade-backed transactions, dealers said.

The three month forward dollar was quoted a 135.50/136.00 rupees.

The rupee steadied after the Central Bank started selling dollars for trade backed transactions.

The rupee came under pressure as the monetary authority released tens of billions of rupees to the market and cut rates amid higher government spending and a credit pick up.

But last week the Central Bank sold 338 million US dollars of bonds in the domestic market and 650 million US dollars in the international market.

When there are large volumes of excess liquidity, which are then loaned out, the exchange rate comes come under pressure when they come for redemption in the forex market through imports.

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