By not intervening in Rupee Forex market , Central Bank is proved itself worthless. By allowing depreciation of Rupee Sri Lanka is lowering its wealth against the world. People will become more poorer. Only some export companies will benifit with lower wage cost , apart from that all others are imported. Sri Lanka cannot sustain an economy by continuesly depreciating the ruppee due to money printing. Selling Governemnt assets is a good thing to pay off debt.But rupee depreciating it will increase the prices of essential goods,electricity,fuel, gas, etc. All Sri Lankans will suffer more. All prices will rising, workers will demand higher wages, central bank will print more money to pay workers. This is a vicious cycle.
Sri Lanka should look at EU,Singapore,Hong Kong, Dubai, NZ, AU,etc. They do not depreciate the currency instead they are rising. when imports are cheaper real wealth will rise. Sri Lanka is a import dependent economy, it cannot be made export oriented one without a stable currency. People who invest will see their asset prices declining, which will inevitably remove more FDI from comming into the country. Those who borrowed loans from abroad will see losses in their businesses.
Sri Lanka will utimately lose with rest of the world with a depreciating currency, our population is not that big or our products have substitutes in other countries.
Sri Lanka should look at EU,Singapore,Hong Kong, Dubai, NZ, AU,etc. They do not depreciate the currency instead they are rising. when imports are cheaper real wealth will rise. Sri Lanka is a import dependent economy, it cannot be made export oriented one without a stable currency. People who invest will see their asset prices declining, which will inevitably remove more FDI from comming into the country. Those who borrowed loans from abroad will see losses in their businesses.
Sri Lanka will utimately lose with rest of the world with a depreciating currency, our population is not that big or our products have substitutes in other countries.
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