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Finance Minister Ravi Karunanayake recently said the rupee could appreciate to Rs.110 against the US dollar if Sri Lanka attracts another US $ 1 billion in foreign inflows. Karunanayake identified the external shocks as the biggest threat to Sri Lanka’s economy and stressed the rupee was hit hard by the currency devaluations carried out by China and India. “With these two big mighty giants on either side, Sri Lanka gets caught in the middle like a leaf in a cyclone. But these are temporary. Tomorrow you see US $ 1 billion coming in and suddenly find the rupee going up to 110. Then what happens? That is what we’re working towards,” he said. Last June, when the rupee was 134 against the dollar, Karunanayake had said that the rupee would strengthen up to 129/130 in two weeks due to increased inflows. The rupee however depreciated 9 percent against the dollar last year. Meanwhile, Karunanayake was thankful to those who had already remitted money to Sri Lanka. “We’re looking at money coming into the country. We have a lot of foreign exchange coming in, I must say, and I thank all of them for having the confidence in us,” he added. Karunanayake brought in a ‘no questions asked policy’ to attract funds to strengthen the rupee and foreign reserves last October, which has raised concerns about various parties using the opportunity for unscrupulous objectives. In January, Karunanayake had said that the policy has seen fruition, with a Belgian investor agreeing to deposit US $ 1 billion in a local bank account to bolster the rupee. He had said that half of it would be deposited immediately and the rest later this year. Sri Lanka’s foreign reserves, which stood at US $ 7.2 billion as at end-December supported by government borrowings, declined to US $ 6.3 million as at end- January, the Central Bank said. The government has to repay around US $ 4 billion in external debt over the course of the year. - See more at: http://www.dailymirror.lk/106315/FinMin-says-inflows-could-help-rupee-appreciate-to-Rs#sthash.kaQpPbHm.dpuf
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