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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyToday at 10:49 am by nihal123

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyYesterday at 10:09 pm by කිත්සිරි ද සිල්වා

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyYesterday at 10:10 am by LSE

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptySat Mar 28, 2020 2:32 am by pjrngroup

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Mar 27, 2020 4:12 pm by The Invisible

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Mar 27, 2020 12:02 pm by nihal123

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyTue Mar 24, 2020 9:59 pm by කිත්සිරි ද සිල්වා

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyTue Mar 24, 2020 6:01 pm by nihal123

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyTue Mar 24, 2020 5:33 pm by කිත්සිරි ද සිල්වා

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyMon Mar 23, 2020 8:59 pm by කිත්සිරි ද සිල්වා

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyMon Mar 23, 2020 7:35 am by The Invisible

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptySat Mar 21, 2020 9:43 am by nihal123

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Mar 20, 2020 9:59 am by Backstage

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyThu Mar 19, 2020 2:36 pm by කිත්සිරි ද සිල්වා

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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 Sat Oct 27, 2018 6:49 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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