The Central Bank must allow the rupee to depreciate beyond Rs 120 per US dollar, to stimulate flagging tea exports, tea exporters say.
“For it to have any real impact, the rupee has to be allowed to depreciate beyond Rs 120, per US dollar. Allowing it to depreciate by 2 or 3 rupees will not do much good,” said the Chairman of the Tea Exporters Association of Sri Lanka, Jayantha Keragala, after the Central Bank allowed a ‘marginal’ float of the rupee on Wednesday. Tea exporters pointed to the overvalued rupee as the primary cause for dwindling Ceylon Tea exports over the past few weeks.
“Some of our major buyers like Russia, Turkey and Iran have devalued their currencies. But the rupee is still strong. So this is making our tea too expensive and buyers are adopting a wait-and-see approach,” said Mr Keragala.
Last week, despite a drastic drop in prices, nearly 60% of tea, mostly low growns, remained unsold at the Colombo Tea Auctions.
However, exports are expected to pick up over the next few weeks on the back of government support, provided the rupee is allowed to depreciate further.
To stimulate buying, tea exporters are also asking the government for reduced interest rates over a 2-month period. “The current lending rates are around 22%. We have suggested bringing it down to 6% only for a 2 month period,” said Mr Keragala.
The exporters are also saying tea production needs to be cut down and poor quality teas should be removed from the market.
|
E-mail