Rupee takes further dive
By The Morning Business Desk
Sri Lankan rupee (LKR) is on a depreciation swing as it hit a record low on Wednesday (31), with the selling price of the rupee being quoted as Rs. 202.04 against the US dollar, marking a depreciation of over 6.4%, for the first three months of this year alone.
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.
Speaking at Parliament recently, Trade Minister Bandula Gunawardana projected that Sri Lanka is controlling the price of the rupee with great difficulty and that it could fall to as much Rs. 300 to Rs. 350 against the US dollar.
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 and reached Rs. 199 during the period from 22 to 25 January, and was declining on and off since then while still remaining well above the Rs. 190 levels.
According to Central Bank data, the rupee recorded a depreciation of 4.9% against the dollar till 10 March. But that was exacerbated this week after the rupee closed at Rs. 202/203 to the dollar in the one-week forward market.
In 2020, the rupee concluded 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.
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%).
In addition, Moody’s Investors Service downgraded the Government of Sri Lanka’s long-term foreign currency issuer and senior unsecured ratings to Caa1 from B2 and changed the outlook to stable resulting in the rupee bond yields to be quoted wide, last year.