Devaluation rumour quashed:

Sri Lanka’s financial situ stable - CB Governor

Shirajiv SIRIMANE

Central Bank Governor, Ajith Nivard Cabraal yesterday quashed speculation that the rupee would be devalued. He stressed that there is no imminent danger in this regard.

He said that the country was in a very stable financial situation and there was no reason for the rupee to be depreciated.

Ajith Nivard Cabraal

The fluctuation of currency is dependant on several internal and external factors and could not be manipulated by the Central Bank or the government, he said. Currency fluxion is decided, firstly, by the exporters and the importers, the borrowers and the lenders, the people who are affected by the cost of living, the people who are buying oil and a wide range of stakeholders who have an interest in the fluctuation of the currency in a country, the Governor said. “Different groups have different ideas as to where the exchange rate should be based on their own views and own benefits,” he said.

“The exporter would want to see the rupee depreciated as much as possible while the importer would like it to be high. The person who is borrowing the rupee would want it to be on a lower level while at the time they are repaying they would like it to be appreciated. There are many ways that this can be playing itself up,” Cabraal said.

“So as far as the Central Bank is concerned we try to provide the structure which gives stability. We have a responsibility by law to provide stability to the economy.

“Sometimes there may be a glut of foreign exchange. We will buy it and absorb it and release them in stages at a time when it is needed for the market. This is all a question of cash flow,” he said. “We have done this very successfully and would continue to do so.”

He said that all over the world people are grumbling that there is no financial stability and when in Sri Lanka we have stability there is no reason to destabilize it.

He said that they went to the IMF in a bid the develop Sri Lanka’s reserves which were at around US $ 3 to 3.5 billion.

“Today we have eight billion and have developed ourselves to a high level.” “We have the strength, ability and capacity to provide financial stability as we never had before.

So we are expected to use that ability and strength to provide stability to the country, which we would do,” he added.