Unfolding the puzzle of rupee depreciation : a case of Sri Lanka.

Abstract

Sri Lanka Rupee depreciated against all major currencies in the first nine months of 2007. The Rupee depreciated by 5.08 per cent 'against the US dollar from end 2006 to end September 2007, the lowest exchange rate ever recorded against the dollar. In August 2007, during a period of two weeks the Rupee depreciated by 0.99 per cent against the US dollar. The declining trend changed, however towards the final quarter of the year when the Rupee appreciated sharply against the dollar with a US 500 million dollars international sovereign bond issue. Overall, the Rupee depreciated by 1.0 per cent against the dollar in 2007, a significant improvement from the 5.2 per cent during the preceding year