Sri Lanka rupee steadies on state bank selling

Mar 20, 2012 (LBO) – Sri Lanka’s rupee was quoted wide at 130.00/131.00 against the US dollar and strengthened with some state bank selling, following a steep fall a day earlier, dealers said. The rupee was quoted at 130.00/20 in mid-morning trad. Excess liquidity in interbank money markets climbed to 23 billion rupees Monday with the an off-market conversion of a foreign capital inflow dealers said.

Sri Lanka’s central bank has been making non-sterilized purchases of foreign currency and sterilized sales off market since February 09 when it said it was reducing interventions.

Both transactions, analysts have warned, put pressure on the currency peg when credit growth is high.