Rupee at 29-month high on CB band cut, dlr fall

Friday, 29 April 2011 01:55 - - {{hitsCtrl.values.hits}}

COLOMBO (Reuters) - The Sri Lankan rupee <LKR=> rose 0.4 percent on Thursday to its highest close in more than 29 months as the central bank lowered and narrowed the dollar trading band after the U.S. Fed decision to continue its ultra-easy monetary policy.

The rupee gained 0.4 percent to 109.70/78 a dollar, its highest since Nov. 10, 2008, from Wednesday's close of 110.16/18 as the Central Bank lowered upper and lower dollar trading band by 20 and 10 cents respectively to 110.00 and 109.50 amid exporter dollar conversions.

"This is due to sharp depreciation of the dollar globally," Central Bank Governor Ajith Nivard Cabraal told Reuters. "We felt a shorter band would be appropriate right now."

The dollar slid to three-year lows against a basket of currencies on Thursday and stocks firmed worldwide, with investors betting ultra-loose American policy would continue to drive money into riskier assets.

The rupee has risen 1.1 percent so far this year, and the central bank last week said it expects further rupee appreciation this year.