Sri Lanka rupee dips to 112.80/90 against greenback

Dec 23, 2008 (LBO) – Sri Lanka rupee weakened towards 112.80/90 against the US dollar, with state banks on the buying side, dealers said Tuesday, as inter bank rupee markets remained liquid. Analysts say excess liquidity amid dollar tightness is usually a sign that the government is in a cash crunch.

The latest official data shows that Sri Lanka spent 1,056 million dollars intervening in forex markets in the past three months. The rupee has been slowly adjusting after central bank intervention was eased earlier in the month.

Early on Tuesday the spot dollar opened around 112.95/113.15 rupees but weakened rapidly with buying interest coming from state names.

“With state names buying, small names rushed to cover their positions,” a dealer said.

The inter bank market is liquid with overnight rates falling to 13.00/14.00 percent levels with excess cash around 6 billion rupees in the past few days.