IMF arrives as rupee slips and slides
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| Cartoon in the Island entitled 'Dollar punches rupee' |
An International Monetary Fund is expected in Colombo today as the Central Bank, again, promised not to intervene in the currency markets to support the value of the Sri Lankan rupee.
The rupee settled this week at a level of about 131 / 132 to the US dollar, having steadily fallen from a level of about 109/ 110 late last year. (See chart here for rupee’s decline). The Central Bank had attempted to halt this decline by selling off its reserves of dollars, spending US $ 2.6 billion in the five months from August last year.
It was eventually forced to abandon this policy because the money ran out and the IMF refused to release a US $ 400 million loan instalment until Sri Lanka allowed the rupee to fall to its natural level. Sri Lanka is now seeking the final US $ 420 million of an IMF loan agreed in June 2009.
