US dollar at Rs.275 in official Colombo money markets

The US dollar was trading at Rs.275 on Wednesday in Sri Lanka’s money markets while the kerb (unofficial) market rate had hit Rs.300 per dollar, traders said.

“Importers are buying the dollar at Rs.275 and this high rate would seriously impact on the cost of living,” one money market trader said adding that the Central Bank should intervene in the market or impose stiff penalties on those trading in the unofficial market.

When the dollar was floated and rose to Rs.260 on March 7, there was an immediate hike in the prices of essential goods including fuel, wheat flour and cement. “At the current rate, prices of essential goods will go up again and it’s going to be difficult for the middle class and low income groups to survive,” the trader said.

While the Central Bank is short of dollars to intervene and stabilise the rupee, it should impose stiff penalties under its earlier announcement of taking action against those who use the unofficial market which is now trading at Rs.300 per dollar.

“The cost of living will be unbearable if the dollar starts rising at these levels. The Central Bank has to step in,” the trader said.