S.Lanka rupee down on IMF loan doubt, bourse down
Tue May 12, 2009 1:07pm BST
* Rupee down on IMF loan skeptics

* International pressure on IMF loan delay mounts

* S.Lanka to face economic crisis without IMF loan-analysts

By Shihar Aneez

COLOMBO, May 12 (Reuters) - Sri Lanka`s rupee -LKR=- fell on Tuesday after a British minister hinted at withholding an International Monetary Fund (IMF) loan to punish Sri Lanka, while profit-taking drove shares down from a six-month high.

he rupee fell 0.76 percent to 118.00 a dollar, before closing down at 117.35/45, 0.26 percent weaker from Monday`s close of 117.05/15.

British Foreign Secretary David Miliband on Monday raised doubts about whether Sri Lankan government could be trusted to use a $1.9 billion loan from the International Monetary Fund appropriately. [ID:nN11548652]

`The market is skeptical on the IMF loan now,` said a currency dealer. `The rupee fell due to this doubt as the market was expecting an appreciation earlier due to this loan.`

Though U.S. officials have said Washington wanted to delay the loan, the U.N. Security Council has delaying it was unnecessary.

he rupee hit a record low of 120.80/121.10 on April 23, mainly on market expectations of a further fall in the rupee as part of conditions by the global lender for the loan.

Sri Lanka`s government sought the loan from the global lender of last resort to help weather the financial storm and avert a balance of payment crisis.

The rupee has fallen around 8 percent since Oct. 30 and 3.75 percent so far this year, after the central bank allowed some depreciation to conserve dollars and help exporters.

The Colombo All-Share index .CSE shed 0.6 percent or 11.47 points to 1,888.62, from a six month high.