Mangala shoots down Rupee depreciation claims

CT WEB- SEP 26 2018

Minister of Finance and Mass Media Mangala Samaraweera, at a media briefing yesterday (25), refuted allegations, levelled by some politicians, that the country’s economy is at stake due to the depreciation of the Sri Lankan currency.

He said that due to the bank crisis reported in the USA in 2008, the investors were given very low interest rates for their investment. Hence, they invested in emerging markets such as Sri Lanka, India, Indonesia and Philippines for better return. Due to the steep progression of the US economy this year, the value of the US dollar recorded an extraordinary increase against many of the currencies in the world.

He added that, as a result of this boom in the US economy, the banks have started offering higher interest rates for the investors and those who have invested in the emerging markets, have withdrawn their investments in order to invest in the USA.

“The US dollar began to strengthen drastically and the other currencies depreciated against it in a similar manner,” the Minister said.

He went on to say that Sri Lankan currency depreciation was 9 per cent while India has recorded a depreciation of 11 per cent. “We have managed to bring down the depreciation of rupee to 160.60,” the Minister stated.  Apart from the developing countries that faced the crisis, developed countries such as Australia and Russia have also recorded depreciation of their currencies against the US dollar, Minister Samaraweera said.

“We could have spent our foreign exchange to address the currency depreciation issue. But, we did not do such an unwise thing. We were extremely careful in using our foreign exchange and we were successful in addressing the issue,” he asserted. The Minister stressed the importance of reserving foreign exchange to repay the debts. “If we do not repay the existing debts, that will be much more dangerous than this. And the country will have to face a plight similar to that of Greece,” he noted.