Sri Lankan rupee slides to 14-month low

Colombo: The Sri Lankan rupee fell to its lowest level in more than a year on Tuesday as the central bank refrained from intervening and allowed a gradual depreciation in the currency.

Central bank officials confirmed it had not intervened in the market in the last three trading sessions and has allowed gradual depreciation of the rupee in the last five trading days.

Shrinking reserves

The central bank is seen letting the currency fall gradually to ease pressure on rapidly shrinking foreign exchange reserves.

"The rupee is trading without central bank intervention. Little import demand is seen. Banks are doing swaps, while exporters are staying away from the market for rupee to depreciate further," said a currency dealer.

Dealers said the rupee fell 0.4 per cent to as low as of 111.90/112.00 a dollar, its weakest since October 26, 2007.

Traders said that if the currency continues to slide at the current rate it will hit 115 by the end of the year.

It has fallen over 1.7 per cent in last five sessions and lost 3.5 per cent since October 30.