COLOMBO: Sri Lanka's central bank is not contemplating a fresh move to devalue its rupee currency this year, its Governor Ajith Nivard Cabraal said on Monday, contrary to market speculation due to a looming balance of payment crisis.
The governor's assurance comes a week after Treasury Secretary P.B. Jayasundera said the country needed flexible exchange rates to curb cheap imports that are putting pressure on the $50 billion economy.
"We are not contemplating any depreciation move for this year." Cabraal told Reuters, also denying a local media report published on Monday.
On Nov. 21, President Mahinda Rajapaksa, in his capacity as the finance minister, shocked markets with a 3 percent currency devaluation aimed at making the island nation's exports competitive.
Daily Mirror, local English daily, quoting an unnamed Treasury official, on Monday said Sri Lanka may further devalue the rupee by between 2.5 percent to 3 percent in early 2012 to ward off pressure on the country's BOP and subsequently strengthen the export sector.
Currency dealers said there was pressure on the rupee due to speculation that it would be devalued in early 2012, with importers attempting to buy dollars to settle their bills, while exporters were holding back greenback.
On Monday, the central bank pumped $20 million into currency markets for a 28th straight session since the devaluation to defend the rupee at 113.90 per dollar.
The bank has spent around $710 million to keep the exchange rate steady since the 3 percent devaluation on Nov. 21.
It spent a net $1.36 billion in the first nine months of the year to keep depreciation pressure at bay.
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