Rupee to recover in 6 to 8 weeks – Nivard tells in Qatar

Peninsula, DOHA:  The Sri Lankan rupee which has been fast tumbling against the dollar is expected to recover soon, and might actually begin appreciating, says Sri Lanka’s Central Bank Governor Ajith Nivard Cabraal.

The official said that the rupee now ruling at 120 a dollar will start looking up over the next “six to eight” weeks.

“We are highly sensitive to these matters in our country. If the imports become too expensive, their volumes shrink. Unlike other countries, we do not take very long to bring our currency under control,” said Cabraal.

Defending the continuously depreciating rupee, Cabraal cited the example of neighbouring country India and said: “In the last three months its currency has depreciated by 18 per cent while ours has depreciated only 5.8 per cent. So I am very optimistic that our rupee will swing back in the days to come.”

Cabraal is here on a two-day visit leading an eleven-member trade delegation, mostly comprising senior representatives of banking industry of Sri Lanka, to woo Qatari investment.

He said the delegation has so far received very encouraging response from Qatari businessmen and the members of the delegation are scheduled to meet with the representatives of 17 local and foreign banks.

Meanwhile, it is noteworthy that there is a popular cry among the Sri Lankan people specially over 100,000 Sri Lankan diasporas living in Qatar who curse the high level of inflation eating away a large part of their income remittance but the governor lamented this criticism and said that despite witnessing 30 years of war, we never had a hyper inflation in the history of our country like what Zimbabwe, Indonesia, Turkey and Germany experienced in the past.

“Sri Lanka has been a high inflation country, but we never had a hyper inflation like 1,000 or 2,000 per cent despite witnessing a war for over 30 years. The economy is in a good shape now. Things are fully under control. In the last 37 months inflation has been in single digits. In fact, it has been under 6 per cent,” he said.

He added that until last February, it has been the longest period in the history of Sri Lankan economy to have low inflation. Now, Sri Lanka, in the last couple of years registered around eight per cent of economic growth. “In both the years inflation has been between 3.5 and six per cent.”

However, he admitted that the inflation had gone to 28 per cent in 2007 but the regulator took extra ordinary measures to bring that down. He said that this year, so far, the inflation is running at 2.7 per cent and that is what prompted us to increase the fuel prices and removing all the oil subsidies. Even if there is an oil shock coming in, we will not have inflation more than 6-7 per cent.

“Qatari investors, especially the bankers, are keen to invest in Sri Lank which has given tremendous hope and encouragement for the authorities to move forward on those lines,” Cabraal said.

Over the last few years Sri Lankan businesses have improved tremendously and among them banking sector has registered an impressive growth. The Sri Lankan banks have a reasonably good balance sheet. They have grown to a level that they can show to the rest of the world as being credible organisations which can receive funding. This is an important factor.

“We believe that when a country moves ahead, the most credible organisations must be the first to reach out to woo investment so that others can take cue from it. This experience can help others to prepare themselves properly to become good recipients of investment,” he said.