Sri Lanka turns to mystery investor in bid to defend rupee - Reuters

Jan. 11 (Reuters), COLOMBO - An unidentified investor has promised to park US$1 billion in dollar deposits in Sri Lanka to help the island nation defend its currency, the finance minister told Reuters (on Monday), in an unusual move that highlights the country's precarious finances.
Finance Minister Ravi Karunanayake declined to reveal the identity of the investor. But he said the investor was Belgian and was working with a Sri Lankan partner.
The investor has promised to transfer the money in two equal tranches from banks in Brussels and Luxembourg, the minister said.
"Instead of going for bonds and other borrowing, we are permitting it to take place," Karunanayake said. "This is better than negative returns in Europe", for investors, he said.
The deposits, which pay an interest rate of 2 per cent, are part of the ministry's plans to raise $3 billion to $4 billion to shore up reserves and defend the rupee, which has hovered around record lows since the central bank floated it on Sept. 4.
The first tranche of $500 million from the Sri Lankan investor's partner was deposited on Dec. 26, and the second is expected to arrive some time this month, Karunanayake said.
So far, the country has got $1.5 billion from such deposits, Karunanayake said.
He said the deposit has no lock-in period and the government would allow withdrawals at any time.
"This is to give confidence to the investors," Karunanayake said.
The money from the investor – and others - appears to have helped. Dealers said the central bank was selling dollars.
The Sri Lankan rupee closed steady at 143.75/85 to the dollar on Monday. It hit an all-time low of 144.30 hit on Dec. 30.