US dollar ranked 7th against Rupee in 2012
View(s):The US dollar ranked 7th in terms of strength against the Sri Lanka Rupee at the end of 2012 with the Kuwaiti Dinar being the strongest currency.
According to the Central Bank (CB) report for 2012, the dollar was pegged at Rs. 127.168 at the end of the year while the Kuwaiti Dinar was Rs 452 per one dinar.
The dollar remained weaker against the Sri Lanka Rupee when compared to several other currencies including the Euro. The UK Sterling Pound was the second strongest at Rs. 205.47. The Euro ranked 3rd against the Rupee with an exchange rate of Rs. 168 followed by the Swiss Franc, the Canadian dollar and the AUD ranked 4th, 5th and 6th, respectively.
The exchange rate policy for 2012 mainly focused on enabling greater flexibility in the rate with the CB relaxing its efforts to artificially inflate the currency as at February 2012. The restriction on CB intervention in the domestic foreign exchange market consequently lead to a rapid 14.56 per cent depreciation in the Rupee against the Dollar in the earlier stages following the major policy change. Subsequently the Rupee appreciated by 4.83 per cent in the second half of 2012 supported by an influx of foreign currency through tourism earnings and worker remittances, the report further noted.
The report also revealed that in terms of cross currency exchange rate movements the Rupee depreciated across all other major currencies in 2012.
Most notably the Rupee experienced a marked depreciation against the pound sterling by 14.6 per cent, the euro by 12.31 per cent and the Indian Rupee by 7.45 per cent whilst depreciating only moderately against the Japanese Yen (0.88 per cent) a reflection of slowing activity and economic growth for Japan in 2012. (SP)
Furthermore the report highlighted that both the Nominal and Real exchange rate depreciated sharply in 2012 despite the appreciation observed in the preceding year. The nominal depreciation of the Rupee against all the major currencies in the FOREX as a result of limited CB intervention as at February 2012 was cited as the biggest contributing factor to the overall depreciation of the ER in both real and nominal terms. (SP)
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