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Business community approves rupee
float 
[29 Jan 2001] 

The Rupee float was good for the country, even though in the short term it may lead to inflation and an increase in the cost-of-living. This was the consensus of a cross section of bankers, exporters and industrialists at the press briefing organised by the National Chamber of Commerce of Sri Lanka last Friday, sources revealed. They also discussed its impact on business and the economy. 

Here are the views expressed: 

R.M.P. Ratnayake, Hatton National Bank:

It is good that the Central Bank has allowed the exchange rate to be determined by market forces. Bankers have hailed it as a positive move. But the Banks have to act responsibly now. The exchange rate should stabilise in a week or two in the Rs. 88-92 region. 

Dulla Weeratunga, Treasurer Commercial Bank:

After 1977 with the liberalisation of the economy supply and demand factors began to play a dominant role in the market. Thereby the exchange rate should really be determined by market forces. The cost-of-living will increase. The unfortunate thing is that it will have an adverse impact on the poorer segments of our society. But it should eventually balance out. 

Ruwan Cooray, Sampath Bank:

We have to boost our exports and bring about a reduction in imports. So this float is a good thing. But it has brought about a good deal of fluctuation. Banks do not want to take risks. We hope it will reach a level of stability soon. 

D. Eassuwaren, Chairman Easwaran Brothers Ltd, a leading Importer:

This float is nothing new to this country. Initially people will face difficulties. After some time the rupee will stop fluctuating. One of the problems that importers will face is with regard to food items. At what prices are they going to import essential food items? 

Joseph Sinnaih, Director Akbar Brothers:

This is nothing new to us. But this time it is a fairly big issue. Now exporters will be paying for packaging on freight at the new exchange rates. By doing so the producer stands to benefit. The exporter will have to pay higher charges for freight. This will also apply to garments. For example the tea auction has to work on a static exchange rate. The moment the rupee starts to fluctuate it becomes a problem. 

M. Riza, Managing Director Sri Lanka Shipping Company Limited, Exporters Association:

Shipping lines stand to lose about 20% from the loss of freight earnings. Shipping lines are now going to ask exporters to pay for freight in US dollars through FCBU account. The Exchange Controller is already using the FCBU account in certain situations. 

N.S.M. Samaratunga, Director Mackwoods, Hony Secretary NCCSL:

It's a positive step. This should make our exports more competitive now. Under a free market system there is no logic in trying to control the exchange rate. The interest rates are expected to come down. It will also boost investor confidence. 

Ananda Wehalla, Deputy President NCCSL:

It is a good move. But the exchange rate may not stabilise soon. Essential items such as crude oil and machinery will cost more now. 

Chandra Embuldeniya, CEC Informatics (Pvt) Limited, President NCCSL:

It is a good move. Local manufacturers and agriculturists now have an opportunity to use local raw material and earn more in rupee terms. The cost of imported agriculture is expected to go up in price. Local agriculturists will get better margins for their products. Small and Medium scale Industries stand to gain by way of competitive advantage as against imported goods. 

Meanwhile the Central Bank Governor, A.S.Jayawardane said that he would not hesitate to take stern legal action against private banks resorting to black marketeering tactics to snatch a larger quantity of dollars by creating an artificial demand.

 

 


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