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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyToday at 7:30 am by yellow knife

» RCL - Royal Ceramics
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyYesterday at 12:47 pm by seek

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Oct 04, 2019 11:55 am by nuwanmja

» මූඩීස් ප්‍රකාශය පිළිගන්න බැහැ – මහ බැංකුව කියයි
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyWed Oct 02, 2019 6:46 am by nihal123

» ආර්ථික වර්ධනය 2.7% ට බසී
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyTue Oct 01, 2019 1:29 pm by nihal123

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Sep 20, 2019 8:38 am by Topcat

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Sep 20, 2019 7:53 am by serene

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» Thought for the day...
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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyMon Sep 09, 2019 7:47 pm by nihal123

» Happy Birthday
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»  Rajgama Heroes !
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» Thread for News on International Markets
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» TJL.N0000 (Textured Jersey Lanka PLC.)
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» Obituary Notice.
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» Thread for News on Local and Foreign Politics
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» 8000 Post Club | Celebration of a Great Milestone කිත්සිරි ද සිල්වා
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyThu Aug 29, 2019 7:17 pm by කිත්සිරි ද සිල්වා

» In the Meantime, Within Our Shores !
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyThu Aug 29, 2019 10:37 am by කිත්සිරි ද සිල්වා

» Sri Lanka to call for bids to develop Mannar Basin natural gas find
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» “බිරිඳගේ සහ පෙම්වතියගේ වෙනස මොකක්ද?”
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» What Would You Do?
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» Back of the Legends
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» NTB.N0000 (NATIONS TRUST BANK PLC)
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» Melstacorp (MELS)
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» Cargills (CARG)
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» SHL.N0000 (Softlogic Holdings PLC)
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptySun Aug 18, 2019 8:14 pm by The Invisible

» SAMP.N0000 (SAMPATH BANK PLC)
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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor Empty Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor

Post by The Invisible on Fri Oct 26, 2018 10:29 am

ECONMYNEXT - Sri Lanka's rupee is now below 100 on a real effective exchange rate index after recent depreciation, Central Bank Governor Indrajit Coomaraswamy said.

"The REER is now a shade under 100," Governor Coomaraswamy told a business forum organized by Asia Securities, a Colombo-based equities brokerage, earlier this week.

"It helps exporters, and helps import substitution industries."

A falling currency mainly helps exporters by cutting real wages as salaries take time to catch up, providing a subsidy at the expense of the working class, pushing up profits of businessmen and helping them avoid innovation and capital investment that would have forced them boost labour productivity, analysts say.

Prices will move up first in exported and imported (traded) products, with raw material prices also moving up.

The profits real salary cut will remain until wages catch up and prices in non-traded sectors move up.

In countries like Sri Lanka the lack of market pricing on energy and utilities like water also gives exporters an additional subsidy at the expense of energy retailers or taxes of the state, when the currency falls.

In countries where the currency depreciates every year, there may be a residual advantage as wages may not catch up exactly with currency depreciation which will eventually lead to labour unrest and riots, especially after prices move up in non-traded areas as well, but wages do not catch up.

Coomaraswamy said the pass-through from recent depreciation on domestic prices was less than expected.

Harvests were coming in which was keeping prices competitive.

Analysts say the falling Indian rupee, produced by the Reserve Bank of India, one of the worst central banks in the region, is also helping keep some prices stable. (Colombo/Oct23/2018)
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