Wild swings in US dollar
View(s):Wild swings in the US dollar exchange rate against the Sri Lank rupee and the burgeoning debt crisis are spooning the economy into a black hole.
Analysts fear that crossing this hurdle will be very painful to the economy. Tuesday the spot dollar rate was at Rs 193, I94 while banks were selling a US dollar at around Rs. 207. “This is a 5 per cent gap which is really big. The spread between buying and selling rates has widened,” an analyst pointed out.
Another remarked that there’s heavy interference in open market transactions. “The Central Bank (CB) calls commercial banks daily on open market transactions. The demand flow is artificially controlled and going forward, this is a bad idea.”
The US $ 500 million Chinese cash came into the country during the Sinhala and Tamil New Year holiday season which is why the exchange rate was at around Rs. 196 but now it’s over Rs. 200 again. A third analyst wasn’t worried. ”We still have enough dollars to run the country.” He added that the CB is carrying out flexible inflation targeting which is a monetary policy to stabilise both inflation around the inflation target and the real economy. (DEC)