The Central Bank of Sri Lanka brought the rupee exchange market to a halt on Tuesday, as banks stopped quoting spot prices against the US doller, after the traders were told not to trade the rupee beyond the 133 level.
On Monday, the Sri Lankan rupee traded at a near record low of 132.90 to the dollar, with a state bank selling dollars at that level.
Speaking to Reuters, four currency dealers said that on Tuesday, the Central Bank had instructed traders not to trade above 133.00, prompting many banks to stop quoting spot prices.
A dealer at the exchange market said,
"The whole market is distorted as central bank does not like to see the spot trading above 133.00. So nobody is quoting spot and everybody quotes spot-next."
Spot-next is when trades are settled within three business days after the initial transaction compared to spot prices which are settled within two business days.
On 12th June, the Sri Lankan rupee hit a record low of 133.60, losing 17 percent of its value since November.
