Rupee foreseen to hit all-time high of Rs. 350: Bandula

25 Mar 2021

Rupee foreseen to hit all-time high of Rs. 350: Bandula

25 Mar 2021

Speaking in Parliament, Minister of Trade Bandula Gunawardena on Tuesday (23) warned that there is a probability of the dollar climbing to around Rs. 350 in the foreseeable future and that the Government is currently maintaining the US dollar value at the Rs. 200 mark under great duress and pressure. Gunawadena further pointed out that a number of factors including the increase in exchange rates have contributed to the current rise in commodity prices. According to data from the Central Bank of Sri Lanka (CBSL), the Sri Lankan rupee (LKR) surpassed the 200 mark against the US dollar last week for the first time in over 11 months, recording a depreciation of 5.4% since the beginning of this year. The depreciation rate recorded so far this year is higher than the depreciation rate of 3.29% recorded during the period from 1 January to 31 December last year. The Sri Lankan rupee began the year at Rs. 189.80 and passed the Rs. 190 level within five days of the new year. Since then, it remained well above Rs. 190; it then reached Rs. 199 during the period from 22 January to 25 January and was declining on and off since then, while still remaining well above the 190 level. As at 31 December 2020, the rupee was at Rs. 189.18 against the US dollar. The lowest value the rupee hit in 2020 was Rs. 200.4 against the US dollar on 8 and 9 April. The rupee recorded an appreciation of 0.7% in 2019. On 26 February, Livemint of India reported that the Indian rupee (INR) and stocks plunged along with markets across Asia amid global selloff in risk assets sparked by the surging US yields. The INR tanked by 104 paise to 73.47 against the US dollar, its biggest drop since March, according to Bloomberg. Meanwhile, as of yesterday (24), the exchange rate of the Pakistani rupee strengthened by 14 paise against the US dollar in the interbank trading on Monday (22) and closed at 156.99 as compared to the previous day’s closing of 157.13. The rupee depreciated by 7% against the US dollar during the last 12 months. The depreciation was even larger against some other key currencies such as the euro (by 17%), UK pound (by 13%), and Japanese yen (by 13%). The erosion of the rupee is an outcome of several factors. A major reason is the decline in foreign exchange earnings from the export and tourism sectors hit by the Covid-19 pandemic. However, the potential import demand pressures that could have emanated from the increased money supply was subdued by the import controls effected last year. Such measures temporarily helped to ease the balance of payments difficulties to a certain extent.

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Rupee foreseen to hit all-time high of Rs. 350: Bandula

Rupee foreseen to hit all-time high of Rs. 350: Bandula

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