Rupee gain to have major positive impact on economy – Chambers

Strengthening of the Sri Lankan rupee as against the US dollar from last week will have a major positive impact to the economy. This is also another step towards reviving the economy to its previous position far sooner than expected.

Country is now stabilized and we are happy about this, said Ceylon National Chamber of Industries (CNCI) Chairman Canisius Fernando. He said that a stronger rupee scenario experienced from the previous week is a major positive step for the local industrialist. The economy will receive a further boost and increase investor confidence with the IMF endorsement and other positive sentiments expressed by foreign countries.

He also praised the government for implementing all their economic agenda/policies sans any political and opposition pressure and implementing all the economic reforms that were spelt out. Earlier governments did go back on some of the reforms when there was opposition and trying to be popular.

Up to March 3, 2023, the Sri Lankan rupee appreciated against the US dollar by 4.9%. Given the cross currency exchange rate movements, the Sri Lankan rupee appreciated against the Japanese Yen by 8.0%, the Pound Sterling by 5.6%, the Euro by 5.4% and the Indian Rupee by 4.4% during this period.

“Implementing these decisions and hiccups will also build up investor confidence and lead to more investments in the near future. With the reduction of the US dollar, raw material costs will come down which in turn will help industrialists reduce some of their overheads and bring down their production cost.

However due to increase of taxes, electricity bill and other factors the industrialists would not be able to pass this on to the consumers. But this will certainly help to keep some of the ailing industries from closing down and allowing them to continue without cutting down on staff as lower raw material import cost will help them to cushion out some of their high expenses”

Meanwhile, Chairman Sri Lanka National Chamber of Commerce, Deepal Nelson said that this is also another positive step towards stabilization of the economy and bringing back investor confidence.

The dollar weakening against rupee will also lead to the reduction in prices of imported items and also lead towards further reduction in the inflation which in turn will lead to increase of buying power of the people.

The other positive impact would be that with buying power increasing the money circulation will pick up resulting in the contracted economy enlarging.

A member of the National Chamber of Exports said that the reduction of the dollar against the rupee will reduce their cash flow. However, the dollar was under Rs. 200 two years ago and exporters will not feel a huge punch from this.