Rupee value: CB denies report, Reuters stands by its story

Friday, 1 June 2012 05:18 - - {{hitsCtrl.values.hits}}

The Central Bank yesterday denied the Reuters report (also published in the Daily FT yesterday) which said the target of the rupee had been shifted to Rs. 132 levels from the previous Rs. 125.

Despite Central Bank denial, Reuters didn’t re-file a corrected story which it usually does if the news agency had made a mistake. This means Reuters is standing by its original story. However yesterday it filed a fresh report headlined “CB says rupee outlook unchanged from 125.”

“Sri Lanka’s central bank said on Thursday it still believed the battered rupee would stabilise at levels stronger than 125 to the dollar, despite comments from a senior bank official,” the Reuters yesterday’s report said.

In a statement, the Central Bank yesterday said its attention was drawn to a misleading news report, which claims that the Rupee/US Dollar exchange rate will stabilise at Rs. 132 per US Dollar. “We wish to categorically deny this claim, which is completely inaccurate and a misinterpretation of facts by the reporter. As the Central Bank has repeatedly stated, the exchange rate is expected to stabilise below Rs. 125 per US Dollar,” the Central Bank said.

In its original report filed on Wednesday, Reuters said Central Bank expects the rupee to stabilise at current levels of around 132 to the dollar without intervention, a senior official said on Wednesday, abandoning its earlier stance where it had expected the currency to settle at a higher level.

The rupee was trading around 132 per dollar on Wednesday. Both the Central Bank and the Treasury had said only recently that they expected the currency to stabilise below 125 a dollar.

“We think that it will stabilise at these levels unless there is a large oil import bill,” Swarna Gunaratna, the Central Bank’s Chief Economist told Reuters in an interview.

“Even without intervening, the exchange rate has stabilised around 130-131. We don’t think that it will go to the 140 or 150 level. It will remain at these levels even without intervening. We want to look what is the trend if we are not intervening,” she was quoted as saying by Reuters.

See also Page 9