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Sri Lanka rupee fall temporary aberration: CB Governor

Aug 28, 2013 (LBO) - A sharp fall in Sri Lanka's rupee was a temporary aberration Central Bank Governor Nivard Cabraal said after the rupee recovered to 133.

30 to the dollar after falling as much as 135.00. "We have looked into the matter and it was a very small trade, Governor Cabraal said.

"We think it is an aberration in the market and we believe that it should settle down to a much more manageable level.
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There were some official interventions in the forex markets by the Central Bank helping the rupee strengthen dealers said.

"It was just to cool down the market and have some calmness brought in," Cabraal said.

The rupee was in a wild ride Wednesday, seeing one of the sharpest single day falls in recent months.

Intervention in forex markets by Sri Lanka's central bank have been minimal in 2013, unlike in other countries.
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Large, sustained interventions interventions by monetary authorities which are followed by liquidity injections (sterilized forex sales) trigger balance of payments crises and extended falls of currencies.

Countries ranging from India to Brazil has experienced sharp fall in currencies in recent weeks, partly due to pull out by investors due to higher interests rates in the US.


Sri Lanka has seen some amounts of bond sales by foreign investors from time to time but new investors have also come in.
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