Feb 09, 2012 (LBO) – Sri Lanka’s rupee fell against the US dollar to below 115 rupees after the Central Bank stopped intervening on a specific price, following a 30 cent lowering of its band earlier in the day, dealers said. The rupee fell from 114.30 to in the spot market Thursday with the lowering of the intervention rate.
The spot dollar traded at prices ranging from 115.10 to 115.90 before strengthening backing 115.50 levels, dealers said.
But the Central Bank later moved out of the market allowing the market to determine the rate, dealers said.
Sri Lanka has lost more than a quarter of its foreign reserves or two billion US dollars defending the currency over the past few months.
The International Monetary Fund has called for greater flexibility in the peg to protect reserves.
Sri Lanka’s rupee peg came under pressure from high credit growth in the second quarter of 2012.
On Friday the Central Bank raised its policy rate 50 basis points to 9.00 percent and also asked banks to limit credit growth to 18 percent during 2012. .