Sri Lanka rupee depreciates 1-pct in 2007, reserves US$3bn: central bank

Jan 01, 2008 (LBO) – Sri Lanka’s central bank says the rupee closed at 107.71 against the dollar in 2007 indicating that the domestic currency only depreciated by one percent against the greenback last year. . “This depreciation was substantially below some of the adverse expectations that prevailed in the market, based on certain claims of a few analysts,” the Central Bank said smugly, taking a swipe at rupee bears.

“It was also substantially below the depreciation of the rupee experienced during the year 2006, which was 5.2 percent.”

Naughty Naughty

However, other analysts say the Central Bank has only itself to blame for any past rupee depreciation, as currency weakness is a direct result of money printing.

In the third quarter of 2007 the central bank worsened currency pressure on the rupee by engaging in an ill-fated sterilized intervention exercise, and managed to escape by floating the rupee in late August.

In October a 500 million dollar bond issuance hit the country and the rupee started to appreciate.

The monetary authority says the rupee had depreciated by approximately 2.7 percent against the sterling pound, 11.7 percent against the Euro and 6.8 percent agai