Stabilise exchange rates: MR tells govt.
June 4, 2012
President Mahinda Rajapaksa told the Cabinet that the government should take measures to stabilise the exchange rates without letting it depreciate further against the US dollar.

President Rajapaksa stressed at last week's Cabinet meeting that the exchange rates should be stabilised maintaining at least around Rs. 125 against the US dollar, informed sources said yesterday.

Currently, the exchange rate against the US dollar is around Rs.130, and the situation has resulted in price hikes of imported items including some essential commodities. However, the Central Bank (CB) is optimistic that depreciation of the rupee value would drop below Rs.125 as a result of some steps already being taken. "Our economic indicators are good. Our inflation and unemployment rates remain low.

We had a problem with regard to the trade imbalance. We went for import cuts to reduce the gap. We restricted vehicle imports. There are some visible results. For sure, the exchange rates will stabilize soon," CB Governor Ajith Nivard Cabraal said yesterday.

He also said that gold worth US $ 6000 million had been imported to the country last year, and it was a drain on the economy.

Meanwhile, a delegation of the International Monetary Fund (IMF) was to arrive in the country yesterday to review the economic situation. Mr. Cabraal said there was only an amount of US $ 400 million left to be delivered to the country under the Stand by Arrangement of US $ 2.6 billion. The IMF earlier instructed the government to stop intervening in the control of exchange rates so that market forces could determine it.

Source: Daily Mirror - Sri Lanka