Currency strategist expresses fresh concerns over rupee

25 January 2016 03:40 am - 0     - {{hitsCtrl.values.hits}}

A A A

Currency strategists have expressed fresh concerns over the Sri Lankan rupee (LKR), noting its prospects for 2016 seem rather depressing compared to other regional currencies. 

“This is the one currency that I am most worried about in Asia. Fundamentally things are not looking so great,” professed Asia FX Strategist Divya Devesh while commenting on the global foreign exchange (FX) outlook at Standard Chartered Bank Global Research Briefing 2016 held in Colombo. 

While weakness in the currency was driven by lacklustre export performance, multiplying the impact was imports, mainly driven by consumption, remaining resilient, he noted. 

Foreigners reducing their position in government securities and foreign institutional investment (FIIs) from Rs.500 billion to Rs.300 billion, Devesh asserted the rate cuts have not helped and the risk sentiments remain fragile. “Together it means there will be further depreciation of the currency. The big debate with the rupee is not the direction; it is the base of the depreciation, which is whether it is going to be sharp and abrupt.” 

Drawing attention to the Central Bank’s (CB) grim foreign reserve position, Devesh said direct intervention from the monetary watchdog would be limited, which had been the scenario since the move in September 2015 to increase the LKR free float.

On a trade-weighted basis placing the LKR on the positive side of the scale, Devesh said, “It is relatively strong. There was a 5 to 6 percent correction last year, but remains strong when looking back at its performance.

“We are still looking at depreciation. Although we expect it to take a gradual course, there will be a considerable amount of risk.”

While there is confidence in the CB’s ability in ensuring the FX markets remain stable, it was emphasised the nation’s high external debt and weakened currency would be problematic for the government and a number of corporates. “The CB has other means to ensure FX markets remain stable. If you are an importer, I would recommend to maintain a high hedge ratio as the depreciation looks high for the stage,” he opined. 
(SAA)

 
See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




Pad politics is back

In November 2019, in the run up to the Presidential election, Sri Lanka debat

ANYTHING FOR MONEY

Some unregulated online lenders are remotely taking control of phones of thos

Frontline cops charge negligence by high-ups worsened police cluster

The police have done an invaluable service in the frontlines to combat the CO

US Vice President-Elect Kamala Harris’s Key Sri Lankan Tamil Aide

An overwhelming feeling of relief has descended upon the world-not merely th

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.