JAAF defends rupee slide; says weaker currency boosts export competitiveness

Felix Fernando

Sri Lanka’s apparel industry sought to calm the concerns over the recent weakening of the rupee, arguing that the currency movement reflected broader global pressures rather than signs of domestic economic weakness, while also potentially improving the country’s export competitiveness.
The Joint Apparel Association Forum (JAAF), the apex body representing Sri Lanka’s apparel sector, said the depreciation of the rupee must be viewed against the backdrop of escalating geopolitical tensions in the Middle East, rising global oil prices and higher shipping costs, which have collectively placed pressure on the currencies across both emerging and developed markets.
The comments come amid the growing debate over the rupee’s recent slide against the US dollar, which has coincided with renewed volatility in global markets, following the Iran conflict and fears of supply chain disruptions.
The JAAF pointed out that Sri Lanka was not alone in facing currency pressure, noting that the Indian rupee had depreciated by 6.4 percent against the US dollar in recent weeks, while the Nepalese rupee weakened by 6.2 percent and the Indonesian rupiah by 5.2 percent. In comparison, the Sri Lankan rupee had depreciated by 4.8 percent.
“The current movement of the rupee must be understood within the correct context. This is not a Sri Lanka-specific situation. Global factors, including instability in the Middle East, higher fuel costs and rising shipping costs, are placing pressure on the currencies across emerging and developed economies alike. India and several other countries are also seeing their currencies depreciate, which shows that this is part of a wider global adjustment,” said JAAF Chairman Felix Fernando.
The industry body’s remarks echoed the recent comments by Central Bank Governor Dr. Nandalal Weerasinghe, who has maintained that the exchange rate movements alone should not be used as a standalone indicator of economic health, particularly when external shocks are driving global currency markets.
The JAAF also argued that a weaker but stable rupee could provide some relief to Sri Lanka’s export sectors at a time when the country is attempting to strengthen the foreign exchange inflows and rebuild the external buffers.
“A weaker rupee does not mean the economy is failing. For export sectors such as apparel, a more competitive exchange rate will make exports more competitive, thereby helping protect jobs, strengthen foreign exchange earnings and support the wider economy. At a time when Sri Lanka needs to build reserves and increase foreign currency inflows, the exporters have an important role to play,” Fernando said.
The apparel sector remains Sri Lanka’s largest merchandise export earner and is highly sensitive to currency movements, freight costs and global demand conditions.
The JAAF said maintaining market confidence and policy stability would remain critical as Sri Lanka navigates heightened external uncertainty, adding that a competitive exchange rate, efficient logistics and lower operating costs would be essential to sustaining the country’s economic recovery and export momentum.