Rupee will appreciate with SWAP deals: Cabraal

Eranga87 · 1 Rupee will appreciate with SWAP deals: Cabraal Fri Sep 25, 2020 1:26 am

Eranga87

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The Sri Lankan rupee will appreciate once the inflow of foreign exchange begins from the SWAP agreements provided to foreigners who invest in government securities, Money and Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal told Parliament yesterday.

Cabinet on Monday gave approval to a proposal to grant US dollars/Sri Lankan rupees buying and selling exchange facilities to the Central Bank of Sri Lanka.

http://www.ft.lk/top-story/Rupee-will-appreciate-with-SWAP-deals-Cabraal/26-706590

dayandacool · 2 Re: Rupee will appreciate with SWAP deals: Cabraal Fri Sep 25, 2020 2:17 am

dayandacool

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I've heard of Swaps and as far as my knowledge goes, a swap or a hedge in other words involves a security or a premium. I hope this will not backfire like the previous hedging deals ANC took part in.

Having said that, I see the positive side of this swap where appreciation of LKR takes place if done properly. But to gain the benefit from this move, Other sectors such as exports and services too should improve so the entire plan moves in sync with the Swap.

Other thing is, having a steady and a fairly valued LKR is more important than an appreciating LKR for businesses specially when it comes to an export based economy. As an example we could take Chinese government devalue their own currency Yuan for facilitating global trade.

Just my 2 cents Wink