Sri Lanka rupee weakens amid excess liquidity

Wednesday, 20 February 2013 - 13:02


Sri Lanka's rupee weakened below 127 to the US dollar in the spot market following a prolonged period of excess liquidity in money markets, though authorities have begun to permanently sterilize some excess rupees.


Sri Lanka's central bank can intervene in forex markets without negative effects through unsterilized reserve sales which will kill some excess liquidity and help keep the exchange rate stable without putting further pressure on credit and imports.


On Monday the Central Bank sold 2.5 billion rupees of its bill stock in an outright sale with 17 days to maturity at an average yield of 8.65 percent.