Sri Lanka devalues rupee

COLOMBO:

Sri Lanka’s central bank has devalued the rupee by up to 15%, taking one of several steps analysts said are needed to obtain an International Monetary Fund (IMF) loan programme that would boost currency reserves and help negotiate debt restructuring. Late on Monday, the Central Bank of Sri Lanka, with immediate effect, set an exchange rate limit of 230 rupees per dollar compared to a limit of 200-203 that had prevailed since October. Analysts said the depreciation was likely done to encourage remittances, a major source of foreign exchange in Sri Lanka, which dropped to a 10-year low of $5.49 billion in 2021 as a result of the Covid-19 pandemic. Sri Lanka’s foreign reserves fell to $2.36 billion at the end of January and it is due to repay about $4 billion in debt in the rest of 2022, making it likely that government will seek IMF assistance.

Published in The Express Tribune, March 9^th, 2022.

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