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Market will beat the Central Bank no matter how powerful the governor is: Harsha

28 Feb 2012 - {{hitsCtrl.values.hits}}

UNP national list parliamentarian Dr. Harsha De Silva speaking to Daily Mirror online said that the reported intervention by the Central Bank to stabilise the dwindling rupee was unfortunate.

“If the Central Bank has intervened to more than reduce extreme intraday volatility of the rupee, it only goes to show the weakness in character in staying the course it took,” he said.

The Central Bank earlier said that it took a policy decision not to intervene to stabilise the Sri Lankan rupee. This resulted in the rupee losing value remarkably against the dollar. The Sri Lanka rupee this week hit a new low and was valued at 123.20 against the US dollar on Tuesday, following which the countries Central Bank intervened to curb the slope.

Some dealers said the central bank has asked currency dealers to bring the trading level to 121.00 via moral suasion, a method of coercing the market to move in line with the monetary authority's desires without direct force.

Central Bank Governor Ajith Nivard Cabraal said the sharp fall was on thin volume, but declined to confirm if the state bank had intervened.

When asked regarding the intervention Cabraal had told reporters, "This is an overreaction, but it will stabilise soon and we may do something on that," he said.

Dr. De Silva an economist further said, “If the Central Bank believes that it can get back once again to defending the rupee at yet another arbitrary rate it is unfortunate, it only goes to show that the Bank has not learned a basic lesson in Economics, which is that the market will always beat the Central Bank, however politically powerful the sitting governor is,” he said. (Hafeel Farisz)

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Market will beat the Central Bank no matter how powerful the governor is: Harsha

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