Sri Lanka rupee trades without intervention

Dec 15, 2008 (LBO) – The Sri Lanka rupee traded around 111.45/55 levels after dipping lower to 111.50/60 Monday, while overnight rates edged lower on excess liquidity, dealers said. The rupee closed at 111.30/45 levels Thursday with no intervention and there was no intervention in early trading Monday, dealers said.

Overnight call rate rates dropped from 18.00/50 levels to 15.00/16.00 levels amidst excess liquidity in the market.

The central bank has announced an eight billion rupee repo auction to mop up excess liquidity, dealers said.

The central bank injected a record volume of liquidity Thursday with its treasury bill stock climbing to 120 billion rupees, and turning a short market into excess by around four billion rupees. Sri Lanka has spent about 30 percent of the country’s foreign reserves in the past two months defending a peg with the US dollar.