Sri Lanka's rupee fell on Wednesday to its seven-month closing low as foreign fund outflows after the central bank cut key monetary policy rates weighed on the currency. Shares closed steady. Foreign investors sold net 12.9 billion rupees worth of government securities in the week ended Aug. 21, the worst weekly outflow in eight months, and the year-to-date net foreign outflow was 40.9 billion rupees, central bank data showed.
The surprise rate cut on Friday is expected to accelerate the outflow, currency dealers say. The central bank lowered rates for the second time in four months on Friday to boost sluggish growth after tourism and investments plummeted following deadly Easter Day bomb attacks by Islamist militants. The rupee ended 0.3% weaker at 180.20/50 per dollar, compared with Tuesday's close of 179.75/85. The currency, however, is up 1.3% this year.