Sri Lankan rupee depreciating against the US dollar is the long tern consequence of successive governments’ failure to increase exports and bring foreign direct investments into the country. Therefore, the rupee will further depreciate against the dollar towards the end of the year, Professor of Economics, University of Colombo Dr. Sirimal Abeyratne said.”The, rupee has been affected and now stands at Rs. 155 per US dollar, Abeyratne told The Island Financial Review.
He said the short-term reason was the depreciation of portfolio investment or thecapital inflow and out flow of the country. Therefore, the government has to have a proper economic strategic plan to promote exports and attract foreign direct investment into the country, he said. ” If not the rupee value will further depreciate beyond our control,” he said.
Abeyratne said that the Central Bank has nothing to do with the depreciation of the rupee and its main task is to protect the external and internal value of the rupee. Therefore, it is incumbent upon any government to drive the economy by increasing local exports and attracting foreign direct investments into the country, he said.
Further, with the depreciation of the rupee the import cost will increase and help the foreign debt payment mechanism, which is a positive factor in this scenario, he added..
” It is nothing surprising when there is a weak export performance and a weak foreign direct investments performance in the economy. Therefore, the rupee will further depreciate to at least Rs. 160 at the end of the year, Abeyratne explained.
‘The maintaining of a realistic exchange value of the rupee is the need of the hour of every government, he said.