Lanka Securities Morning Note 26 August 2015

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Lanka Securities Morning Note 26 August 2015

Post  Melissa Pereira on Thu Aug 27, 2015 10:53 am

Sri Lanka should think carefully before any currency devaluation: Harsha de
Silva: Sri Lanka should think carefully about devaluing the rupee as it may not be a good strategy to follow, even though other countries are trying to increase exports by weakening their domestic currencies, newly elected member of parliament and former deputy minister of policy planning Harsha de Silva said. “The only way that we can become efficient and competitive is if we consciously consider reforms in an economy in order to make production goods and services efficient and competitive.” he said the Sri Lankan rupee has depreciated two and half percent against the US dollar for this year. “Every country is trying to increase exports (to the) same strong markets such as China,” “Some countries are trying to devalue their currencies for exports competitiveness. This may not be good strategy for countries like Sri Lanka to follow,” “If American interest rates start to go up what will happen
to FDI and investment flows to Sri Lanka? Therefore we need to think carefully before any currency devaluation.” “If we depreciate what is going to happen to inflation, because we import a large amount for our consumption market. So we are restricted in terms of depreciating. So what options do we have? Competitive economy though competitive exports is the only solution.
Please refer the link for more details- http://www.lsl.lk/pdf/research/morningnotes.pdf

Melissa Pereira

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