The recent fluctuation in the value of the Sri Lankan rupee against the US dollar should be viewed favorably, as it can enhance export competitiveness, the Joint Apparel Association Forum (JAAF), the apex body on Sri Lankan apparel recently noted in a statement that has been made public.
“The ongoing depreciation of the Sri Lankan rupee must be viewed in the context of wider global pressures, including the conflict in the Middle East, rising global fuel prices and increasing shipping costs,” the statement said.
“A weaker rupee should not be interpreted as a sign that Sri Lanka’s economy is underperforming. This position is also consistent with recent comments by Central Bank Governor Dr Nandalal Weerasinghe, who noted that exchange rate movement alone cannot be used as the sole measure of the country’s economic health, as currency depreciation has a number of positive implications.”
The body further noted that the Central Bank Governor pointed out that Sri Lanka is not facing this pressure in isolation. “In recent weeks, the Indian rupee has faced renewed depreciation pressures driven by higher oil prices, persistent capital outflows, and a stronger US dollar. While the Sri Lankan rupee has depreciated by 4.8% against the US dollar, the Indian rupee has depreciated by 6.4%, the Nepalese rupee by 6.2%, and the Indonesian rupiah by 5.2%.”
The body, in its statement said that currency depreciation is currently a global and regional phenomenon, unlike in 2022, when Sri Lanka’s exchange rate pressure was driven by a domestic economic crisis.
“The current movement of the rupee must be understood within the correct context. This is not a Sri Lanka-specific situation. Global factors, including instability in the Middle East, higher fuel costs and rising shipping costs, are placing pressure on currencies across emerging and developed economies alike. India and several other countries are also seeing their currencies depreciate, which shows that this is part of a wider global adjustment,” said JAAF Chairperson Felix Fernando.
“A weaker rupee does not mean the economy is failing. For export sectors such as apparel, a more competitive exchange rate will make exports more competitive, thereby helping protect jobs, strengthen foreign exchange earnings and support the wider economy. At a time when Sri Lanka needs to build reserves and increase foreign currency inflows, exporters have an important role to play,” Fernando said.