Sri Lanka currency now competitive after float: CB Governor

Governor_of_the_Central_Bank_Arjuna_Mahendran

Sept 28, 2015 (LBO) – Sri Lanka’s currency is now competitive after being floated last month and will support export growth, the central bank governor told media on Monday.

“Like other currencies in emerging markets, the Sri Lankan currency has also adjusted to become slightly weaker against the U.S. currency,” Arjuna Mahendran, the central bank governor, said.

“Economy is progressing on an even keel. Trade deficit hasn’t grown too sharply and imports have been relatively well contained,” he said.

Referring to a seven percent depreciation of the rupee against the dollar so far this year, central bank officials said the Real Effective Exchange Rate was now more competitive.

“The exchange rate is now achieving equilibrium after initial volatility,” Mahendran said.

Commenting on credit growth to the private sector above 15 percent, which is a sign of loose monetary policy, Mahendran added: “I won’t rule out the possibility of a rate hike if credit growth continues to grow faster.”

This credit growth above 15 percent had prompted a report to the Finance Ministry from the central bank informing it of the situation, he said.

However inflation remains low and there is no issue of the central bank printing money at the moment despite a high holding of treasury bills and bonds, the deputy governor Nandalal Weerasinghe said further highlighting why the current monetary policy stance was appropriate.

If there was printing of money, there should be visible signs of it such as high inflation, Weerasinghe said.

The trade deficit was also beginning to narrow with steps taken to address a widening, with a float of the rupee and a reduction of the loan to vehicle ratio of leases to 70 percent.

 

 

 

 

Subscribe
Notify of
guest
4 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Shee Lankan
Shee Lankan
6 years ago

Inflation is under control due to low commodity prices. From crude oil to milk, sugar, rice.

Christina Williams
Christina Williams
6 years ago

All these key advisors, politians aren’t educated up to par, it’s more considerable to show in action what you actually state.

The Finance Minister Mr Karunanayake stated the Dollar will be 129 in June, nearing October the dollar has gained momentum and the Rupee has deprciated 3% within that short period of time.

Unacceptable and if this key policy these black coat individuals preach, Sri lanka’s economy will be going downhill.

Hansi
Hansi
6 years ago

First of all we have to elect a suitable parliament with educated politicians.

expat
expat
6 years ago

surely the learned Governor knows that a floating currency is supposed to float according to demand and supply and other macro & micro economic factors. by artificially holding it the previous and current government was basically delaying the pain. now the pain will be felt by the masses (of course with a lag effect as most imports under new rates will come in a couple of months). wait till December and then see what the inflation is (hopefully calculated properly by the learned economist of Yahapalanaya! LOL).