Sri Lankan rupee ends all time low; share prices edge up

CEAT Kelani Holdings Managing Director Ravi Dadlani (right) and Lanka Ashok Leyland CEO Umesh Gautham exchange the OEM agreement

October 13, 2006 (LBO) – Sri Lankan rupee closed to a lifetime low Friday, on heavy demand by imports to settle trade bills, while share prices rose as investors were upbeat over a possible resumption of talks between the government and the Tamil Tiger rebels. The rupee fell to 105.95 to the dollar from Thursday’s close of 105.50. The currency has lost over three percent since the start of this year, dealers said.

The previous lifetime low of 105.47 was set on Dec.17, 2004, before the island receive an influx of aid dollars that helped lift the currency, following the Asian tsunami.

Traders expect the rupee to breach the psychological 106 level next week, as the government buys dollars to settle oil import bills.

The currency was artificially propped up in the last few weeks, by way of indirect intervention by the Central Bank which sold dollars via state and foreign banks.

However, Sri Lanka’s Central Bank Nivard Cabraal told Bloomberg that bank won’t “tamper” with the currency market, after the rupee fell to a record low against the dollar.

Colombo’s All Share Price index gained 0.29 percent to close at 2,469.95 on sales of 211.78 million rupees, according to Colombo Stock Exchange figures.

Today’s gainers were led by conglomerate Distilleries Company of Sri Lanka, which rose 2.5 percent to 60.50 rupees, while Indian fuel retailer Lanka IOC was flat at 32.25 rupees.

In the telecom sector, the island’s biggest phone company Sri Lanka Telecom rose 1.1 percent to 22.25 rupees, while the largest cellular operator, Dialog Telekom was flat at 22.50 rupees. Call rates in brokers markets were 12.75 as against Thursday’s 13.00, amidst a liquidity deficit of 3.2 billion rupees.

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