ECONOMYNEXT – Sri Lanka’s rupee was traded at 325 to 330 to the US dollar on Wednesday, market participants said as the rupee failed to establish a float, amid a low policy rate and a surrender requirement that took money out of the economy.
The rupee was quoted around 325/340 to the US dollar in late trading, but offers petered off later, dealers aid.
Sri Lanka attempted to float the currency but with a low policy rate and a surrender requirement.
The policy rate is only 7.5 percent but inflation topped 15 percent by February.
Sri Lanka’s banks have to surrender 50 percent of all dollar receipts from exporters and expat workers to the central bank which take money away from the market and blocks a float.
Economists have called for steep rate hike and to remove the surrender requirement to establish a float.
The central bank rejected a 20 billion rupee bond auction, but markets were inactive.
01.09.2024 was quoted at 14.80/15.15 percent up from 15.00/15.0 percent before failed auction. (Colombo/Mar30/2022)