“Exchange rate offers fair opportunity for all”

CBSL Governor Ajith Nivard Cabraal noted that the Central Bank had taken a more holistic view of both the exchange rate and interest rates and that these two were managed to create a more conducive environment for economic activity.

Cabraal further highlighted the strength of funding lines available to Sri Lanka inclusive of entirely successful private placements of debt instruments.

Cabraal was speaking to Bloomberg TV on February 18. Cabraal on the exchange rate said, “I think it is a fair price and it provides an opportunity for all stakeholders. The CBSL takes a holistic view of the issues.”

Cabraal said the country had already slowly raised rates in a manner that was appropriate to the domestic conditions.

Concerning the recurrent calls by certain parties to seek a deal with the IMF, Cabraal noted that given the funding strategy that the country was pursuing there was no need for IMF endorsement of the country’s finances to gain investor confidence.

Cabraal further highlighted that the country had been successful with all bond auctions being fully subscribed. He said the stock exchange remained at all-time highs while interest rates in the country remained at reasonable levels.

Cabraal pointed to the fact that Chinese debt to Sri Lanka was of a similar scale to Japanese debt to the country. He said that Chinese financing had been more forthcoming during the troubled COVID-19 period. Most holders of Sri Lanka’s development bonds maturing in February have agreed to re-invest after being repaid.