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Last Updated : 2024-04-29 22:32:00
2 April 2024 03:00 am - 26 - {{hitsCtrl.values.hits}}
Five leading export associations have called on the authorities to tackle the pressing challenges posed by the Sri Lankan rupee’s appreciation against the US dollar.
They also highlighted the additional hurdles, including the restrictions on foreign currency movement between commercial banks and compulsory conversion of export earnings into local currency.
“A stronger rupee means our goods become more expensive for international buyers, directly affecting our competitiveness in the global market. The exchange rate peaked at over Rs.364 per US dollar in May 2022, which led to increased operational costs, compelling us to adjust our cost base in line with the higher inflation experienced in the country,” said the Exporters Association of Sri Lanka, Joint Apparel Association Forum of Sri Lanka, National Chamber of Exporters, Tea Exporters Association, Sri Lanka Association of Manufacturers and Exporters of Rubber Products, in a joint statement to the media.
“The rapid appreciation of the rupee, with rates falling below Rs.300 per US dollar since March 19, has placed us in a precarious position, threatening the sustainability of our businesses and the livelihoods of those we employ,” the associations added.
They went on to note that despite the appreciation of the rupee, the cost of living remains high, continuing to level pressure on worker wages.
The timing of the rupee’s appreciation coincides with weak global demand for the majority of the merchandise exports and severe competition from competing countries.
During the height of the crisis, the Central Bank of Sri Lanka implemented a policy for exporters, by Gazette No.2251/42, dated October 28, 2021, to mandatorily convert foreign exchange receipts as a temporary measure. This policy enforced the conversion of all repatriated export proceeds into rupees within a stipulated time frame, except for specified exempt payments.
The associations asserted that the exporters do not have the freedom to plan the conversion as per the cash flow needs or choice of bank, often forcing conversion at an overvalued exchange rate and placing further strain on the export operations.
Accordingly, the exporters stressed it is crucial to recognise that the landscape of Sri Lanka’s foreign exchange reserves has significantly transformed and the continued enforcement of the mandatory conversion policy, considering the current positive reserves, is counterproductive.
“Persisting with this approach has placed exporters at a market disadvantage and forced them to operate on an unlevelled playing field, eroding their competitiveness. It further acts as and is viewed as an anti-export policy measure.
Export-led recovery needs to be prioritised to ensure the inflow of vital export earnings and to encourage investments in the future,” they said.
In an effort to iron out the issues, the associations asserted the need for the Central Bank to revisit and repeal the aforementioned gazette, in alignment with the evolving economic context. This appeal is made with a vision towards fostering an environment that not only enables but actively supports the growth and competitiveness of Sri Lanka’s exports, they said.
“By addressing these policy concerns, we can lay the groundwork for sustainable economic development, secure employment for our citizens and ensure the continued prosperity of our nation,” the associations said.
Dee Tuesday, 02 April 2024 07:44 AM
Seek advice from NPP economic maestros! They may say to negotiate export bills in LKR instead of dollars since LKR is stronger and a future NPP government will make the LKR even more stronger by banning dollar trading! And people including local bank managers will believe and vote for them!
Chandima Tuesday, 02 April 2024 07:49 AM
It's all about exporters right? What about the other 20 million who will benefit from the rupee devaluation as the prices of utilities, fuels and other costs that will come down in due course?
Cricy Tuesday, 02 April 2024 09:18 PM
But that hasn't happened -> "They went on to note that despite the appreciation of the rupee, the cost of living remains high, continuing to level pressure on worker wages"
Palitha Tuesday, 02 April 2024 07:53 AM
So what about the windfall bonanza these guys had when the dollar went through the roof?
Ruwan Tuesday, 02 April 2024 07:55 AM
The cost of living would start to decline, as the impacts flows through the system, It always has a lagged impact.
Jayantha Tuesday, 02 April 2024 08:31 AM
What kind of jokers are these. Rupee becoming stronger gradually is important for the stabiity pf the county. Selfish bunch of crooks nothing else.
Jude Tuesday, 02 April 2024 08:41 AM
Don't worry The rupee will depreciate once government start repayment of Debt coz More than 3 years government haven't Made any repayment of Debt. Right now there's low demand for the dollar due to curtailment of imports. And people have very low purchasing power so Less imports. SL economy is an Illusion!!!
joshua Tuesday, 02 April 2024 09:16 AM
then what are the importers going to do? Selfish fellows who enjoyed everything when the rupee depreciated now talking bullshit
N.M. Perera Tuesday, 02 April 2024 09:18 AM
Need a balance. Exporters and Importers and Public need to survive. USD/LKR at 285 odd conversion in reasonable.
Jackie Tuesday, 02 April 2024 09:31 AM
Speak to government and get subsides just like what China does. Or become competitive by becoming innovative. When dollar increased from 187 to 500 didn't you enjoy Allow the market to decide the exchange rate And Play your game smartly
Roshanaly Tuesday, 02 April 2024 09:41 AM
The importers are not going to reduce the price, it will only increase their profit.
Gamini Tuesday, 02 April 2024 09:43 AM
what do you want, the rupee to be weak so that exporters earn profits and people continue to suffer
Kapila Tuesday, 02 April 2024 09:44 AM
in any case these exporters park their dollars overseas and do not bring them back to SL
$reasoning Tuesday, 02 April 2024 09:49 AM
U guys had a good time when rupee was depreciating.. now let others enjoy when it appreciates.
Ravana Tuesday, 02 April 2024 10:01 AM
Let the rupee appreciate. We have to pay off the unnecessary loans. Don't weaken our currency.
Kandy Tuesday, 02 April 2024 10:45 AM
The CBSL should ask these so called exporters to bring back the USD export income stacked/invested overseas rather than not allowing the economy to rise again. Selfish business people!
Sam Tuesday, 02 April 2024 11:41 AM
Appreciation of the rupee will bring down costs for the people in the short to mid term. Stop being so selfish and greedy. At an exchange of 300 it is well above the 230 it was before disaster struck, you should still be quids in, i'll bet you didn't reduce costs to you customers, if you did you deserve everything you get. Make good product and make them well and they will sell on any market.
A Tuesday, 02 April 2024 12:34 PM
It's a demand supply matter exporters cannot decide this...
Amani Tuesday, 02 April 2024 01:09 PM
Might be helpful for your studies
Premalal Perera Tuesday, 02 April 2024 01:20 PM
All cries will fall dear ears. The government is only interested in the next election.
Joseph Tuesday, 02 April 2024 04:25 PM
What a bunch of corrupt buggers these guys are. When the Rupee appreciates it is a sign that the economy is becoming healthy and these corrupt exporters for their own selfish gain oppose good intentions.
navratne willamune Tuesday, 02 April 2024 04:33 PM
cant have it both ways.tourism will loose.impoters of raw materials for manufacturing,drugs, other essential items cannot be produced will gain.ordinary citizens want benifit very much unlikely wholesalers and middlemen will gain
People need to survive Tuesday, 02 April 2024 09:03 PM
USD/LKR should be around 180-200 for stability.
Ruben Huling Tuesday, 02 April 2024 09:34 PM
When local currency appreciates against USD, other countries celebrate but it is the opposite in Sri Lanka. Dirty businessmen in Sri Lanka wants reverse the trend because they have horded unaccounted trillions of Rupees under their beds.
KP Wednesday, 03 April 2024 05:32 AM
Did the exports flourish when the rupee was weak, wages were minimal and electricity was subsidized. No! It was never even comparable to what our regional peers like Vietnam exports. So piling up misery on the population for the benefit of a handful of exporters and foreign customers isn’t the answer.
Athk69 Wednesday, 03 April 2024 09:24 AM
When the USD was historically way below its current levels, the national income of tea, rubber, and coconut was way higher than the present levels. What has changed? Only the people managing these industries. Think differently, to be different.
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