Sri Lanka rupee steady at around 141 to US dollar in forex markets
ECONOMYNEXT – Sri Lanka’s rupee was quoted at 140.95/141.00 to the US dollar Friday dealers said, which analysts say is showing signs of becoming a re-pegged rate after an attempt to float it earlier this month.
The rupee fell steadily from 134.75 to the US dollar after open intervention in forex markets were stopped on September 04.
Data however shows that backdoor interventions are continuing and the float is yet to take hold.
The rupee has come under pressure from large volumes of debt monetized (printed money) to accommodate an expanded budget deficit from state salary hikes and subsidies.
Critics say Sri Lanka’s central banks and fiscal authorities has a strong record spanning over half a century of accommodating budget deficits and fuel subsidies with printed money, destroying a soft-peg to the US dollar and imposing trade controls on the people, instead of correcting loose fiscal and monetary policy.
A monetary policy announcement is due later today. The International Monetary Fund has said Sri Lanka should not cut rates, but look at tightening policy. (Colombo/Sept25/2015)