COLOMBO (News 1st) – The Sri Lankan rupee edged up after tumbling to a record low on Wednesday (April 18), with dollar demand from importers counteracting selling of US currency by exporters.
The rupee hit an all-time low of 156.50 intraday and plunged even further to 156.35, before recovering slightly to close at 156.30/40. According to the Central Bank, the rupee has weakened by 2.0% against the US dollar up to April 5 this year.
The rupee has also depreciated 4.8% against the Euro, 6.4% against the Sterling pound and 7.1% against the Japanese yen. The rupee fell 2.5% last year and 3.9% in 2016.Economists say the downward trend of the Sri Lankan rupee will continue for some time due to the shortage of foreign currency in the market.
Speaking on the matter, Former Deputy Governor of the Central Bank, Dr. W. A. Wijewardena said Sri Lanka’s balance of payment has been in crisis from about 2010 since there is a massive trade deficit which has not been supported by remittances and other inflows to the country. He noted that the present government was expected to bring the situation back to normal when it came to power in January 2015, and as a result of its negligence, exports have not performed well even though they have shown a slight improvement in the year 2017.
“There is a shortage of foreign exchange and this shortage has to put pressure on the LKR to depreciate unless the CBSL puts dollars from its own reserves,” he added, “CBSL cannot do it in terms of the agreement signed with the IMF.”
Furthermore, he said the general public needs to be prepared for the situation as the trend will continue until November. Reuters citing dealers said they expect the rupee to gradually weaken and face higher volatility this year (2018), due to huge debt repayment commitments by the government.