Reuters/Colombo
The Sri Lankan rupee fell to a record low yesterday as a state-run bank, through which the central bank directs the markets, lowered the dollar selling rate by 20 cents, dealers said.
Central Bank Governor Arjuna Mahendran said late on Thursday the country should let market forces determine its rupee exchange rate and warned that trying to buck the global trend of a rising dollar is “suicidal”.
Currency dealers said hope that the rupee would strengthen on rising inflows was fading as the currency has come under pressure due to a strong US currency, political uncertainty ahead of a parliament poll and foreign selling in rupee bonds during the last few days.
The spot currency ended at 134 per dollar, weaker from Thursday’s close of 133.80.
“The central bank lowered the spot by 20 cents, now the state bank is selling dollars at 134 (rupees per dollar),” a currency dealer said on condition of anonymity.
Two other dealers confirmed the move. Officials from the central bank were not immediately available for comments.
On Tuesday, the state-run bank cut the spot rupee’s level by 10 cents to 133.80 after retaining it at 133.90 during the previous five sessions through Monday.
The move came amid tepid dollar sales by exporters and the continuing political uncertainty, dealers said.
The market expects the rupee to be stable as long as the central bank offers dollars, but its stability will depend on inflows into the country,
currency dealers said.
Finance Minister Ravi Karunanayake said on Thursday that Sri Lanka is planning to borrow $1bn via five-year syndicated loans as early as this week from international banks and it could borrow up to $2bn.
One-week forwards ended at 134.15/35 per dollar weaker from Thursday’s close of 133.95/134.10, while actively traded three-month forwards ended at 135.90/136.00 per dollar compared with
Thursday’s close of 135.70/90.
Central Bank Governor Arjuna Mahendran: u201cAttempt to buck the global trend of a rising dollar is u201csuicidalu201d.
