Sri Lanka rupee weakens further

Nov 23, 2011 (LBO) – Sri Lanka’s rupee weakened to 114.15/20 in the spot dollar market, after closing at 113.88/90 rupees a day earlier, after the monetary authority adjusted a daily guidance rate, dealers said. The rupee fell more than 3.0 percent a day earlier after the a budget for 2012 said the rupee should be depreciated three percent in a surpriose move.

Sri Lanka’s rupee had been under pressure due to high credit growth from mid 2011 leading to reserve losses as a peg was defended.

In August, interventions began to be actively sterilized, a phase which is difficult to emerge out of without a clean float.

However interest rates have been adjusted upwards in recent months.