No artificial devaluation of the rupee - Ravi K

Sri Lanka’s newly appointed Finance Minister Ravi Karunanayake said an artificial devaluation of the rupee will not be allowed and he will push for low interest rates in the future.

“We have to face the realistic world situation, but that does not mean that we will artificially devalue the rupee,” Karunanayake said. “We are not blind to external forces.”The Central Bank allowed the rupee to float last 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.

The Central Bank gave direction to the forex market by indicating a daily reference rate, from last Friday, allowing market participants to trade the US dollar in the interbank market.

The US dollar/rupee selling rate for Friday, September 11 was 141.23. “We will move forward proactively, ensuring what we suggested earlier, by reducing interest rates and strengthening the rupee. A devaluation by a single rupee has a 40 billion rupee impact on 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. We will ensure we make the country a friendly destination for investments and through that the benefit will go down to the people. We will take the challenge from now on,” he said.

- SJ