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Tuesday May 30th, 2023

Amphan 900km away from Sri Lanka, now Super Cyclonic Storm

EYE OF THE STORM: A NASA picture of Super Tropical Storm Amphan taken from its Aqua satellite which passed over the Northern Indian Ocean on May 18.

ECONOMYNEXT – The centre of the tropical cyclone Amphan is now 900 kilometres away from Sri Lanka’s Trincolmalee coast on May 19, but it has been upgraded to a Super Cyclonic Storm, the meteorological department said.

“Due to the influence of the system, the prevailing showery condition over the island particularly in the south-western part is likely to continue further,” the met department said in a forecast issued at 0530h.

“Heavy showers above 100 mm are likely at some places. Wind speed can increase up to (50-60) kmph at times over the island. Cloudy skies can be expected over the island.

“Showers or thundershowers will occur at times in Southern, Western, Sabaragamuwa, Central and North-western provinces with isolated heavy showers above 100 mm in Nuwara-Eliya, Kandy, Matale, Ratnapura, Kegalle, Galle and Matara districts.”

A day earlier the storm was 600 kilometres away from Trincomlee.

America NASA has released pictures of vapor data from the storm taken by its Aqua satellite when it passed over the Northern Indian Ocean on May 18. At the time Amphan was equivalent of a Category 5 hurricane on the Saffir-Simpson Hurricane Wind Scale, NASA said.

Sri Lanka has issued landslide warnings for several districts and there and strong winds had also partially destroyed 192 houses by May 18, with 145 in Polonnaruwa, the disaster management centre said.

The fishing community has been asked to be vigilant.


The Super Cyclonic Storm ”AMPHAN” (pronounced as UM-PUN) over west-central Bay of Bengal and neighborhood, lay centered near latitude 14.9°N and longitude 86.5°E, about 900 km North-east of Trincomalee at 11.30 p.m. yesterday (18th May). It is very likely to move north-northeastwards towards west Bengal coast during the afternoon of 20th May.

Fishing and naval community are requested to be attentive regarding future forecasts issued in this regard.

Condition of Rain:

Showers or thundershowers will occur at times in the sea areas around the island.

Heavy showers can be expected at some places in the sea areas extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota.


Winds will be South-westerly in the sea area around the island. Wind speed will be (50-55) kmph. Wind speed can increase up to (70-80) kmph at times in the sea area extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota.
State of Sea:

The sea areas around the island can be rough and the sea area extending from Puttalam to Trincomalee via Colombo, Galle, Hambantota and Potuvil will be very rough at times.

Temporarily strong gusty winds (up to 70-80 kmph) and very rough seas can be expected during thundershowers.


Valid period: 2020.05.18/1500UTC to 2020.05.19/0900UTC

The Extremely Severe Cyclonic storm” AMPHAN” (pronounced as UM-PUN) lay centered over Central part of South Bay of Bengal and neighborhood, at 11.30 a.m. of today (18th) near latitude 13.4°N and longitude 86.2°E, about 780 km North-east of Trincomalee and intensified into a Super Cyclonic Storm. It is very likely to move North-northeastwards wards during next 24 hours and then re-curve north-northeastwards towards west Bengal coast during 20th May.

Synoptic situation: –

Synoptic situation: –

Winds: –

Very strong SW’ly to W’ly winds over SW Bay of Bengal.

Strong occasionally very strong W’ly to SW’ly winds over Basses.

Strong W’ly to SW’ly winds over SL West.

Strong NW’ly to SW’ly winds over Comorin.

Fresh occasionally strong NW’ly winds over Maldives and Lakshadweep.

Weather: –

OCNL Showers/ T’Showers over Northern part of SW Bay of Bengal, Maldives and Lakshadweep.

SCT Showers/ T’Showers elsewhere.

Seas: –

Very rough over SW Bay of Bengal

Rough, very rough at times over Basses.

Rough over SL West.

Fairly rough, rough at times over Maldives and Comorin.

Fairly rough over Lakshadweep.

*Temporarily strong gusty winds and rough seas can be expected during thundershowers.

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Sri Lanka rupee appreciation squeezes exporters

ECONOMYNEXT – Sri Lanka’s recent appreciation is starting to squeeze apparel exporters as their domestic costs including wages and energy, were hiked over recent months, when the rupee fell steeply, an industry official said.

Companies had raised salaries and emoluments at rates averaging 25 percent for workers while transport costs have also gone up but not has come down, Yohan Lawrence Director General of the Join Apparel Association Forum said.

Apparel factories in particular also provide transport and some meals for workers.

Electricity prices have also been hiked, based on the rupee which was weaker. A tariff cut is expected from June after the rupee appreciated and imported fuel prices fell.

Sri Lanka’s rupee collapsed in 2022 from 200 to 360 to the US dollar as interest rates were suppressed with liquidity injections and a failed attempt was made to float the rupee with surrender requirement in place.

From the second half of 2022, with higher interest rates and negative private credit, the central bank has avoided printing money under conditions which are generally accepted to be difficult, and is broadly running deflationary open market operations, triggering a balance of payments surplus and putting the rupee under upward pressure.

Central bank net credit to government which was 3,302 billion rupees in September in 2022, was down to 3,209 billion rupees by March 2023, part of which was due to rollovers, analysts say.

Market pricing of fuel and electricity by the Ministry of Energy and also spending controls and tax hikes buy have also helped contain domestic credit.

Sri Lanka also has mandatory conversion rules, imposed on exporters, which is a concern for exporters.

“We believe rupee should be at its natural level, but with forced conversions you won’t get the correct picture,” Lawrence said.

Sri Lanka has to release a plan to remove import controls, exchange controls and other restrictions imposed in the period where policy rates were suppressed with liquidity injections (so-called multiple currency practices and capital flow measures) by June under the IMF program.

Apparel exporters have also seen orders fall amid tighter conditions in Western markets.

The central bank has to peg (intervene actively in forex markets and create money) to meet reserve targets under an IMF program and cannot free float (avoid creating money through international operations) the rupee.

The newly created money has generally been absorbed in an overnight liquidity shortage.

There have also been foreign purchases of rupee Treasuries. Amid a contraction in credit, the inflows also do not turn into imports fast as the money if the money is spent.

By making purchases a little below what is allowed by the contraction in domestic credit, the rupee can be allowed to appreciate, analysts say.

The central bank has so far allowed the rupee to appreciate to around 300 to the US dollar from 360 levels under a transparent guidance peg up to February.

Except after the 2008/2009 currency crisis, Sri Lanka’s central bank has not previously allowed to the rupee to appreciate under IMF programs where the first year in particular sees balance of payments surpluses, before private credit and domestic investments picks up again.

One of the considerations used by third world central banks are Real Effective Exchange Rate indices.

The REER of the Sri Lanka rupee based on a basket of currencies calculated by the central bank was 61.12 points in February before the rupee was allowed to appreciate by lifting a surrender rule.

In March the index went up to 69.55 points, but remained steeply below 100. Real effective exchange rates are calculated also taking into account inflation in counterpart trading nations.

Sri Lanka’s inflation index had hardly risen since September amid rupee gains. Falling food prices can help contain pressure for further wage hikes, analysts say. (Colombo/May30/2023)

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Sri Lanka forum to discuss central bank independence vs sound money

ECONOMYNEXT – Central bank independence and sound money will be under discussion at a public event organized by the Sri Lanka chapter of the Bastiat Society today, May 30, as island is recovering from the worst episode of monetary instability since independence.

The forum will feature Lawrence H White, Professor of Economics at George Mason University in the US, and W A Wijewardene, former Deputy Central Bank Governor, of the Central Bank of Sri Lanka.

“The discussion will compare the current system against alternative systems and explore the relationship between such banking systems and sound money,” the organizers said.

White specializes in the theory and history of banking and money. He is the author of “The Clash of Economic Ideas” (2012), “The Theory of Monetary Institutions” (1999), “Free Banking in Britain” (2nd ed., 1995), and “Competition and Currency” (1989).

Wijewardene has been speaking on central bank independence in Sri Lanka long before it became a topic of wider discussion, but also on accountability.

In April, a Central Bank Independence and Other Matters, which includes a collection of his orations on the subject over the years as well a recent development was published.

The discussion comes as independent central banks in the West have created the worst inflation since the 1970s and early 1980s and are apparently unaccountable to parliaments and the public.

The early 1980s also saw the first wave of external debt crises in so-called soft-pegged countries in Latin America and Eastern Europe in particular as the US and UK tightened policy to end the Great Inflation.

The discussion will be held at 7.00 pm at the Lakmahal Community Library and those interested can register online, the organizers said. (Colombo/May30/2023)

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Sri Lanka teachers withdraw from A/L paper marking again over unresolved payments

ECONOMYNEXT – Paper marking of GCE Advanced Level exam has been delayed again as teachers withdrew from duties after Sri Lankan government failed to pay the promised allowances, All Ceylon Teachers Union said.

Teachers were promised an allowance of 15,000 rupees, however, the Union complained that only 10,000 rupee was given by the government for the teachers who have been involved in paper correction in over 30 centers across the country.

“As many teachers are stationed in examination centres away from their home towns, the government promised a 15,000-rupee allowance for these teachers,” Joseph Stalin, the Secretary of the All Ceylon Teacher’s Union, told EconomyNext.

“However, due to the constraints imposed by the dwindling treasury, the examinations department states they can only pay 10,000 rupees. This is insufficient to cover the teacher’s expenses and has led to protests.”

Meanwhile, upon inquiry denying the allegations, the Examination Commissioner Amith Jayasundara said, allowance was specified earlier.

“There was no such promise of a 15,000 rupee advance,” Jayasundara told EconomyNext.

“This was merely a consideration that was discarded after consulting the financial regulations. We have decided on a performance-based pay system with 10,000 rupees being paid after five days of paper marking.” (Colombo/May 29/2023)

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