September 11, 2018 (LBO) – Global investment bank Nomura shocked the Sri Lankan financial community yesterday by publishing a report that said Sri Lanka was the number one country in the world most at risk of a currency crisis.
The Central Bank of Sri Lanka (CBSL) as well as finance ministry officials have pointed out that they have made a significant calculation error. This error has significantly skewed the results of their analysis. In the CBSL’s official and rapid response, Senior Deputy Governor Nandalal Weerasinghe has pointed out that:
“Needless to say, such an erroneous report is likely to trigger a disturbance among investors, and could cause irreparable damage to Sri Lanka given the volatile global market conditions.”
“I am certain that Nomura Holdings Inc. understands our concern, and I should be grateful if you could immediately correct this error, and provide similar publicity to the correction without delay.”
Nomura has yet to comply with the CBSL Deputy Governor’s request. Nomura is a large global investment bank with a market capitalisation of over US$15bn, and over 25,000 employees worldwide.
Despite the problematic report, the Sri Lanka rupee was stable on the day at 162 to the US$. The currency has been weak this year and is near its all-time low. However, other emerging market currencies have fared much worse than the LKR in 2018.
CBSL response to Nomura report below: