Sri Lanka rupee extends gains

July 23, 2012 (LBO) – Sri Lanka’s rupee rose to 130.90/131.05 levels against the US dollar Monday extending earlier gains with inflows as monetary policy remained in favour of a stronger rupee, dealers said. Some inflows to bond markets were also not bought the monetary authority helping keep upward pressure on a rupee peg.

Dollars bought by the Central Bank creates is taken out of the market and instead rupees are created in the economy, weakening the currency peg.

In money markets overnight repo rates were at 9.60/70 percent levels and un-backed call money was quoted around 10.50/60 percent dealers said.

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