Update 2-Sri Lanka Central Bank may intervene less in forex: source

Sept 04, 2015 (LBO) – The Sri Lankan central bank may intervene less in the forex market by not quoting a specific level, a market source told Lanka Business Online, as the rupee opened lower against the dollar on Friday.

Early on Friday, USD/LKR saw a transaction done at 136.75, after wide quotes and no trades. Activity was also seen at 137.25 and 138 in very thin trade, dealers said.

At 10.03am the rupee was quoted at 137.50/137.75, a dealer said. The rupee closed at 134.75 on Thursday.

The central bank will allow the market to decide the exchange rate by not guiding with a specific rate. However, the bank will intervene if the levels are too high, Reuters also quoted a source as saying.

The central bank said on Thursday it received 1.1 billion dollars from a swap agreement with the Reserve Bank of India and it expected the rupee dollar exchange rate to stabilise.

A balance of payments deficit this year has put pressure on the Sri Lankan rupee, and market dealers expect the central bank to allow a managed depreciation.