Sri Lanka will not take all advice that is given: CB Governor

Sept 19, 2011 (LBO) – Sri Lanka will not take all economic advice that is given but chart its own course based on a longer term path, Central Bank Governor Nivard Cabraal said amid concern over continued defence of the island’s dollar peg. “We’ve got to be very clear to the public, to the economic stakeholders that advisors are not responsible for their actions,” Cabraal told a monetary policy forum in Colombo.

“They can give advice; they can leave the next day.

“People sometimes think when you want to take advice from outside and then you’ve got to only do that.

“That is one of the dangers – that we have certain advice done publicly; then others believe we’ve got to take that advice.”

The International Monetary Fund has advised Sri Lanka to make its peg less rigid after the monetary authority spent hundreds of millions of dollars in defending the rupee at around 110 to the US dollar in the spot market.

The spot dollar is now quoted narrowly around 110.09/110.10 with state banks selling dollars into the market but forward rates have risen, indicating the underlying pressure in the market.

An IMF mission left the island earlier this month without completing its review calling for a flexible exchange rate say