Sri Lanka’s new Finance Minister says won’t allow artificial devaluation, high interest rates

Sep 04, 2015 (LBO) – Sri Lanka’s newly appointed Finance Minister Ravi Karunanayake says an artificial devaluation of the rupee will not be allowed, and he will push for low interest rates in the future.

“There are realistic situations in the world we have got to face today, but that does not mean that we will artificially devalue the rupee,” Karunanayake said. “It was only to show that we are not blind to external forces.”

The Central Bank gave the rupee freedom to float on Friday, with reduced intervention, and by not indicating a daily reference rate. As a result the rupee depreciated to 137.50/138.00 on Friday from 134.75 on Thursday.

“We will be moving forward from today proactively, ensuring what we mentioned earlier. Reducing interest rates and ensure strengthening the rupee and moving forward.”

“Every rupee devaluation has a 40 billion rupee impact to the economy. The only way that you can survive is if you reduce the interest rate,” he said.

“There is more than 10 -12 billion dollars out there. We are trying to get that money back to the country,” he said.

“We will ensure we make the country a nice destination for investments and through that we will ensure the benefit will go down to the people of this country.”

“We will take the challenge from now on.”

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Lalith
Lalith
6 years ago

First time in history central bank is removed from Finance ministry because Ranil wants it to be under him. Yet we have the Finance minister predicting about the rupee. what a joke this turned out to be.

Thush Weerakkody
Thush Weerakkody
6 years ago
Reply to  Lalith

Ideally the Central Bank should not come under Finance ministry. Central bank responsible for Monetary policy and need to be independent. Finance ministry responsible for Fiscal policy so at least Treasury and Central bank in two ministries is good

Shee Lankan
Shee Lankan
6 years ago

Exactly ! But will the central bank be independant !

Thush Weerakkody
Thush Weerakkody
6 years ago
Reply to  Shee Lankan

I know that the present setup is not the best but comparatively better than previous setup where one of the election campaigner made the governer of the central bank. We couldn’t expect the overnight change of policies to a good governance system but progressive steps would be good to achieve good governance. Mostly the people of the country should value the good governance prior to our politicians practice it.

Dev
Dev
6 years ago

Come on! Arjun Mahendran is also just that. A Ranil’s man who comes from abroad to head BOI and now Central Bank every time Ranil wins an election. He goes back to his country after Ranil loses. How dangerous is that?

Chan Wee
Chan Wee
6 years ago

ideally the central bank shud be reporting to the parliament and not to any ONE minister. look at the US system; the fed chair reports to the congress, though appointed by the president and ratified by senate. look at english system, the governor is appointed by the queen and reports to parliament. many other examples of independence from a single authoritative person, instead to a body of governance. it does not matter whether the central bank is under one minister and finance ministry is under another. all jokers are in the same boat , eating from the same hotel and talking the same bullshit !!!

BKVWHK
BKVWHK
6 years ago

That’s fuzzy economics. Everyone raises interest rates to defend a currency, not lowers it. http://www.bloomberg.com/news/articles/2015-05-13/bank-of-ghana-unexpectedly-raises-benchmark-interest-rate-to-22-