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SL rupee hits all-time low

01 Sep 2021

  • Plummets to 204.89 against USD
  • LKR to USD jumps Rs. 2 within one day
  • Fall despite USD weakening globally
By Madhusha Thavapalakumar While the US dollar is weakening globally according to reports, the Sri Lankan rupee hit a record low yesterday (31 August) as it was quoted at Rs. 204.89 against the US dollar as per the data from the Central Bank of Sri Lanka.  Yesterday’s rate was a day-over-day hike of Rs. 2, as on Monday (30 August) it was quoted at Rs. 202.89. With the record high selling rate of the US dollar, the Sri Lankan rupee recorded a depreciation of 7.3% so far this year. On the other hand, the Indian rupee witnessed appreciation against the US dollar by 20 cents yesterday. According to reports, it has surged over a two month high against USD. Bloomberg yesterday noted that a rally in global currencies driven by a weaker dollar will have to clear a hurdle from the US jobs data this week to extend its rebound. “New Zealand’s dollar, South Korea’s won, and South Africa’s rand led gains in major currencies on Tuesday (yesterday) amid broad weakness in the greenback. The dollar has fallen 0.6% against the euro since Federal Reserve Chair Jerome Powell said on Friday ( 27 August) that the central bank could start scaling back asset purchases this year while holding borrowing costs. He sounded a note of caution, however, about employment levels.” Even though the CBSL’s selling rate of US dollar was hovering around Rs. 202 levels, Licensed Commercial Banks (LCBs) were quoting them at least Rs.10 higher than the CBSL’s selling rate. MP Harsha de Silva, taking over Twitter recently, stated that while the Central Bank is forcibly keeping the rupee below or around Rs. 202 levels, banks have adjusted to the market rate. The previous highest selling rate was set a little over four months ago when the selling rate of the US dollar hit Rs. 204.62 on 15 April, which was reduced to Rs. 201.28 on the following day. At the end of 2020, the Sri Lankan rupee was valued at Rs. 186.40 against the US dollar, and with the development in the value of the rupee against the US dollar, the local currency had depreciated by 6.8% within the first four months of the year. The tentative all-time low rupee depreciation for the year was led by a trend of depreciation that began on 5 April, with the selling price of the rupee being quoted at Rs. 201.95, which plummeted within six working days to Rs. 204.628 as quoted last Thursday (26 August). Trade Minister Bandula Gunawardana in April stated in Parliament that the rupee could fall to as much as Rs. 300 to Rs. 350 against the US dollar, while highlighting the country’s efforts in controlling the price of the rupee with great difficulty. As the exchange rate remained relatively stable in February 2021 due to increased customer inflows into the domestic foreign exchange market, the rupee only depreciated slightly by 0.2% against the US dollar in February.


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