Sri Lanka’s new Finance Minister says won’t allow artificial devaluation, high interest rates

[sashimaalTop contributor]

Sep 04, 2015 (LBO) – Sri Lanka’s newly appointed Finance Minister Ravi Karunanayake says an artificial devaluation of the rupee will not be allowed, and he will push for low interest rates in the future.

“There are realistic situations in the world we have got to face today, but that does not mean that we will artificially devalue the rupee,” Karunanayake said. “It was only to show that we are not blind to external forces.”

The Central Bank gave the rupee freedom to float on Friday, with reduced intervention, and by not indicating a daily reference rate. As a result the rupee depreciated to 137.50/138.00 on Friday from 134.75 on Thursday.

“We will be moving forward from today proactively, ensuring what we mentioned earlier. Reducing interest rates and ensure strengthening the rupee and moving forward.”

“Every rupee devaluation has a 40 billion rupee impact to the economy. The only way that you can survive is if you reduce the interest rate,” he said.

“There is more than 10 -12 billion dollars out there. We are trying to get that money back to the country,” he said.

“We will ensure we make the country a nice destination for investments and through that we will ensure the benefit will go down to the people of this country.”

“We will take the challenge from now on.”

[LeonTop contributor]

Good if he uses his brain than heart to take the necessary steps. And hope he will work responsibly with out tying to take revenge from whom he doesn't like.

[Ethical TraderTop contributor]

Thanks Shashi for sharing this info.

Being a small country heavily dependant on trading we are exposed to all what happens in the world at large.

USA is likely to increase their interest rates by the end of this year. China devalued Yuan attracting heavy criticism from USA + EU. India too devalued their rupe some time ago. These ngative factors will have a sure dent in our balance of payment account in time to come if no complimentary monitory measures are taken..

Sri Lanka needs to take hard dercisions to counter this in the short-term. Freeying the rupee from artificiasl controles is one good measure.

I appreciate the finance ministers statement but can he withstand the preassure from the leftist parties when inflation begins to hit double digit as a result of this action.

If the Govt., finds effective ways to target current subsidies at only the needy, then, there want be a problem. Wll hope for the best.

[Future123Active Member]

Ravi K said before the election that he would take steps to bring the rupee to Rs.130 to a US$. Has it happened?

Now he is saying he will not allow artificial devaluation of the rupee when it's at Rs. 138 to a US$.

He will say the same thing when Rupee depreciates to Rs. 145 to a US$. NATO in action

HNB selling rate as at 04 Sept 2015 is Rs. 139.60 to a US$. We are going to have serious problems of inflation in time to come if it's not controlled and if foreign investors don't invest in Sri Lanka. Ravi K should first understand to treat businesses and investors well with good economic policies rather than scaring them away from Sri Lanka. Hope he would do a better job this time.
http://www.hnb.net/data/tools/exchange_rates.php

[stockback]

I think they are going to take 4 Billion USD laon from IMF. when we are getting loan from IMF we have these problem always. there putting this as a condition

what do you think short term market behaviors

I think ASI will touch 6800 with this decision. any idea........

[nihal123Top contributor]

රුපියල ගැන මුදල් ඇමති බලාපොරාත්තු දල්වයි
biz_man Top News September 10th, 2015 0

ශ්‍රී ලංකා මහ බැංකුවේ මැදිහත් වීමකින් තොරව ඇමරිකානු ඩොලරයට සාපේක්ෂව රුපියලේ අගය නිදහසේ තීරණය වීමට අවස්ථාව ලබාදීමෙන් පසුව රුපියල වාර්තාගත ලෙස අවප්‍රමාණය වීම පිළිබඳව මුදල් අමාත්‍ය රවී කරුණානායක මහතා යළිත් වරක් මාධ්‍ය වෙත කරුණු දක්වා තිබේ.

අමාත්‍යවරයා මෙවරද සඳහන් කර තිබෙන්නේ වැඩි කලක් නොගොස් රුපියල නැවතත් පිළිගත හැකි මට්ටමක් දක්වා පැමිණෙනු ඇති බවයි.

අවශ්‍ය අවස්ථා වලදී රුපියලේ අගය තීරණය වීමේදී මැදිහත් වන බව මහ බැංකුව පවසා ඇත.

ඇමරිකානු ඩොලරයක මිල අන්තර් බැංකු මුදල් වෙළඳ පොළ තුළ මේ වනවිට රුපියල් 139 කට ආසන්න මිලක් ගෙන තිබේ.

මෙය, ආනයන භාණ්ඩවල මිල ගණන් ඉහළ යාමටත් අපනයන ආදායම් වැඩිවීමටත් හේතුවී ඇත.

[kassTop contributor]

very soon we can see Ravi saying completely different story. SL does not have a good BOP to have a total free float, country like us needs some intervention otherwise it could be detrimental to many local industries. Look at the vehicle import market these days. Ppl cant run businesses when uncertainty is high. It's governments job to have some economic stability. Total free float is good thing but surely for not a country like ours. ( or we are not ready yet)

[smallvilleTop contributor]

He will say the same thing when Rupee depreciates to Rs. 145 to a US$. NATO in action

Good to dream mate.. Our exports will thrive while imports die..

Shame on RAVI knw? Trying to make another MR strategy here..

[HAL9000Top contributor]

Rupee at 140 per dollar seems an exciting news for many export companies as well as tourism industry. If any one thinking of export driven economy this is the way to go except for some stone age minds.

[guruji]

We should encourage exports

[pathfinderTop contributor]

Rupee at 140 per dollar seems an exciting news for many export companies as well as tourism industry. If any one thinking of export driven economy this is the way to go except for some stone age minds.

Agree with you,but we should have something to export to balance the massive imports.ATM SL doesn't have much to export except Sri Lankan ladies to middle east.

[Future123Active Member]

In a way rupee depreciation is good for exporters but on the other side it increases cost of living for the public. We mainly import everything.
1) Oil and gas
2) Medicines
3) Milk powder
4) Gram, peas, potatoes, sugar, onions, dhal and other important food items
5) Vehicles
6) Dry fish and canned fish

Sri Lanka is not a country that have bigger exports. Our exports are simply nothing when compared to imports. The rupee devaluation would affect the living standards of many as the real income hasn't gone up but cost of living going up.

Personally I'm more benefited if the rupee depreciates further as I focus on export companies. But over a period of medium to long term this will not good for the country and people.

[BackstageTop contributor]

Maybe be we should have a thread dedicated for Ravi K. Future, what say ?

[Future123Active Member]

Yes Backstage. His actions can cause us bigger losses. Therefore, I avoid any vulnerable shares that Ravi K might target. Eg: Tile sector, Blue chips, Aluminium companies. Any company earning annual profit over Rs. 2 billion.

This is my personal strategy only and not for others. This is due to the punitive taxes that Ravi K would implement on companies and from the lesson learned from the mini budget.

Please do your own research and don't depend on this.

[yellow knifeTop contributor]

Rupee at 140 per dollar seems an exciting news for many export companies as well as tourism industry. If any one thinking of export driven economy this is the way to go except for some stone age minds.

Agree with you,but we should have something to export to balance the massive imports.ATM SL doesn't have much to export except Sri Lankan ladies to middle east.

If you can remove many adjectives in professional presentations that will make your logic clear and will not arouse emotions among those who do not agree with your argument..

Stone age minds... just remove the adjectives and rewrite... If any one thinking of export driven economy this is the way to go except for some minds...So other minds will speak out as you are not trying to bulldoze them...

[GroundedKestrel]

What men?! most of you buggers said that there will be this MEGA bull-run after the election. I purchased shares also. Looks like i would i have made much more money if i had just converted my rupees to USD before the election.

Harsha and Eran better bump their heads together with Nishantha and Lansa and figure this out... fast

[Future123Active Member]

What men?! most of you buggers said that there will be this MEGA bull-run after the election. I purchased shares also. Looks like i would i have made much more money if i had just converted my rupees to USD before the election.

Harsha and Eran better bump their heads together with Nishantha and Lansa and figure this out... fast

I'm also waiting for bulls as many predicted. So far no positive news from the government for investors. Did they make us bulls?

[yellow knifeTop contributor]

If you are a trader you have to think the reverse of the majority


ඉබ්බන්නේ පුච්චන්නේ අනිත් පිට
අපිට මොකද අපි අට සිල් උපාසක


Regarding forex I started following thread for the whole purpose of economic mis- management since 8th Jan 2015 and the whole purpose was to show that you can take advantage in forex...specially by keeping USD

https://forum.lankaninvestor.com/t4403-sri-lankan-rupee-and-forex?highlight=forex

[Market loverTop contributor]

What men?! most of you buggers said that there will be this MEGA bull-run after the election. I purchased shares also. Looks like i would i have made much more money if i had just converted my rupees to USD before the election.

Harsha and Eran better bump their heads together with Nishantha and Lansa and figure this out... fast

I'm also waiting for bulls as many predicted. So far no positive news from the government for investors. Did they make us bulls?

[Future123Active Member]

What men?! most of you buggers said that there will be this MEGA bull-run after the election. I purchased shares also. Looks like i would i have made much more money if i had just converted my rupees to USD before the election.

Harsha and Eran better bump their heads together with Nishantha and Lansa and figure this out... fast

Just coming from Commercial Bank. 1 US$ = Rs. 142.45
GK, you have missed it. We are having a mega bull run on Rupee. 150/= possible within weeks.

[pee ratioActive Member]

What men?! most of you buggers said that there will be this MEGA bull-run after the election. I purchased shares also. Looks like i would i have made much more money if i had just converted my rupees to USD before the election.

Kess ralla on the ground - it is like this. it is like total misunderstanding like.

see RAN-NIL was talking about MEGAPOLIS
some other people thinking MEGAPOLICE (to stop murder / rape etc)
RA -VI thinking MEGA-POLI (to tighteening credit)

who is saying MEGA BULL RUN ?

only cows no ?  

now comming time for you to take bull by the horns and stay grounded like.

[pee ratioActive Member]

"Sep 04, 2015 (LBO) – Sri Lanka’s newly appointed Finance Minister Ravi Karunanayake says an artificial devaluation of the rupee will not be allowed".

how about natural devaluation like happeening now. that is allowed.

[kassTop contributor]

From tomorrow onward finance companies and banks are not allowed to provide full leases or 100% loans for vehicle purchasing. Maximum debt component has been 70% as CBSL detective issued today.

[GroundedKestrel]

How will this impact VFIN and LFIN? It will surely reduce the profits in the short term... Although, the rate of defaulting will be less. Thoughts ?

[Future123Active Member]

From tomorrow onward finance companies and banks are not allowed to provide full leases or 100% loans for vehicle purchasing. Maximum debt component has been 70% as CBSL detective issued today.

Where did you see this news? I thought all the finance companies don't provide 100% lease. If they do so, the risk is too high. For property mortgages banks usually ask for over 20% deposit.

This is a good thing for the country and for finance companies. The vehicle sales are at record levels and the government has to control the foreign outflow in someway and keep the exchange rate under control.

I think responsible finance companies may already insist customers for a deposit or downpayment. Can't believe getting 100% credit. Anyway, this reduces the chance of a credit buble, bad loans and rupee depreciation.