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| Sunday, 9 January 2005 |
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Rupee strengthens as aid flows The large inflows of foreign grants to the affected areas have resulted in the Sri Lankan rupee appreciating reversing its trend of depreciation over the last few months of 2004. The rupee appreciated against the US$ and many other foreign currencies one week after the disaster. According to the Central Bank (CB), US$ buying rate has dropped from Rs.103.52 on Monday to Rs.98.53 by Thursday and the selling rate fell from Rs.104.57 to 100.33 At the same time Sterling Pound has fallen from 199.69 to 189.45, Euro from 141.08 to 133.40 and Japanese Yen from 1.02 to 0.97 over the same period. Commenting on the positive trend Prof. Jagath Wickramasinghe said that this is a result of increased inflow and reduced outflow of foreign currencies. As a result country's reserves have increased. Huge donations and loans pledged by the rich countries and donor agencies are the other reasons. Large stocks of goods received as immediate humanitarian reliefs would discourage imports. Prof. Wickramasinghe said that this trend would prevail for about two months. " The responsibility of the authorities is to turn this into an opportunity for economic development," he said.On Wednesday addressing a press conference CB Governor, Sunil Mendis said that reduction in oil prices, Indian credit line and Iranian credit line facilities that ease the payment of petroleum bill are the other factors that contributed to strengthening of the Sri Lankan rupee. IMF has released a US$300 million loan and that money will be received within the next few weeks, CB said. Prof. Wickramasinghe warned about negative impacts of the rupee appreciation and said that it would affect our exports. However, CB assured that this appreciation would not affect our export competitiveness, because most of the competitive currencies have also appreciated against US$ over the past few months. GW |
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