Sri Lanka rupee hits record low; shares down

Thu Jun 28, 2012 8:29am EDT

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COLOMBO, June 28 (Reuters) - The Sri Lankan rupee hit a record low on Thursday on importer demand for the U.S. currency, but a state bank intervention helped the local unit to recover, dealers said.

The rupee hit a new low of 134.30 to the dollar, surpassing its previous low of 134.10 hit on Wednesday.

"The highest deal was done at 134.30 on light trade due to importer dollar demand. But it eased after the state bank started selling dollars around the 133 level," a currency dealer said on condition of anonymity.

Two other dealers confirmed the move.

The rupee closed at 133.80/90 to the dollar, a tad firmer from Wednesday's close of 133.90/134.00. It has fallen 1.75 percent since June 18.

Analysts expect the rupee to stabilise and to reach 128 by end of the year, provided the central bank tightens monetary policy further.

The central bank has already raised rates twice since February and curbed credit growth to reduce demand for dollars in the market.

The rupee has lost 17.8 percent of its value since November, when the government allowed a 3 percent devaluation.

The Colombo Stock Exchange's main index lost 0.8 percent or 39.78 points to 4,955.91, its lowest since June 14.

Turnover was 797.2 million rupees ($5.96 million), below this year's daily average turnover of 988.4 million rupees.

Foreign investors were net sellers of 199.6 million rupees worth of shares on Thursday, but they have been net buyers of 23.13 billion rupees so far this year. ($1 = 133.7500 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Jeremy Laurence)

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