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Rupee hits new low, but state intervenes

28 February 2012 07:18 am - 17     - {{hitsCtrl.values.hits}}

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Sri Lanka's rupee hit a new record low of 123.20 on Tuesday on importer dollar demand, but a state bank sold greenbacks to reverse the drop in an apparent break with the central bank's new policy not to intervene at a specific price, dealers said.

"A state bank sold dollars at 123.00 and gradually brought down the level to 121.00," a currency dealer said on condition of anonymity. Three other dealers confirmed the move.

The rupee on Monday closed at 121.30/121.50.

Some dealers said the central bank has asked currency dealers to bring the trading level to 121.00 via moral suasion, a method of coercing the market to move in line with the monetary authority's desires without direct force.

Central Bank Governor Ajith Nivard Cabraal said the sharp fall was on thin volume, but declined to confirm if the state bank had intervened.

"This is an overreaction, but it will stabilise soon and we may do something on that," Cabraal told Reuters. When asked if the central bank would use moral suasion to protect the currency, he said: "We may do that as well." (Source: Reuters)

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  Comments - 17

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  • josh Tuesday, 28 February 2012 01:36 PM

    there are some but the govt doesnt want to work with them because they dont support the governments policies...

    Cha Tuesday, 28 February 2012 02:07 PM

    I don't understand how we pump out so many brilliant scientists and economists from our universities, but instead have idiots without an A-level degree running the country

    bandaiya Tuesday, 28 February 2012 02:45 PM

    lets protest against the USD. its a conspiracy tool of the USA and the WEST to undermine Sri Lanka Rupee. Lets carry a backpack of notes to the market soon. thanks to our farsighted politicians.

    solico Tuesday, 28 February 2012 02:57 PM

    varaduna chintanaya

    shan Tuesday, 28 February 2012 03:31 PM

    Cha
    Your comments is the only best

    Lanka Tuesday, 28 February 2012 07:27 AM

    Results of suppressing the rupee for too long.

    lucifer Tuesday, 28 February 2012 07:47 AM

    next fuel hike is being scheduled.... in another week there will be a 3% increase...

    j Tuesday, 28 February 2012 08:19 AM

    We are blind from patriotism so we don’t feel it.

    Dalu Banda Tuesday, 28 February 2012 08:23 AM

    Look likes, Down the Pallam started.

    TMA Tuesday, 28 February 2012 08:46 AM

    Will there B another foreign conspiracy after that

    CYMAiWIMALAi Tuesday, 28 February 2012 09:26 AM

    Exchange goods.

    Minnal Sri Tuesday, 28 February 2012 09:36 AM

    High time to appoint proper economists to handle the financial matters.

    Game Kolla Tuesday, 28 February 2012 10:14 AM

    There is a dark cloud above us and ..soon there will be thunderstorm.

    Real peace Tuesday, 28 February 2012 10:16 AM

    Running out of chinthanas and dollars in reserve. God save our motherland.

    Protestor Tuesday, 28 February 2012 10:49 AM

    We can arrange a protest campaign against US economy and ask them to depreciate their currency (USD) to safeguard our currency.

    appu Tuesday, 28 February 2012 10:53 AM

    Do we have proper "economist" anymore in SL?

    Soma Sundaram Tuesday, 28 February 2012 11:07 AM

    thats good ...soon i like to see our currency fetch a USD rate of 200/= per dollar ...well done Sri Lanka


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