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Sri Lanka must ‘think carefully’ about devaluation: Harsha

ECONOMYNEXT – Sri Lanka needs to “think carefully” about devaluating its currency at a time when other countries are trying to increase exports by weakening their domestic currencies, former deputy minister of policy planning Harsha De Silva said.

“Every country is trying to increase exports (to the) same strong markets such as China,” said De Silva, who has returned to parliament as a newly elected ruling party member.

“Some countries are trying to devaluate their currencies for exports competitiveness. This may not be good strategy for countries like Sri Lanka to follow,” he was quoted as saying at the inauguration of the CEO meeting of the Asian Trade Promotion Forum held in Colombo.

“If American interest rates start to go up what will happen to FDI (Foreign Direct Investment) and investment flows to Sri Lanka? Therefore we need to think carefully before any currency devaluation.”

De Silva had earlier warned that Sri Lanka’s export competiveness had been weakening in recent years and that the rupee was under pressure.

His remarks came as Sri Lanka’s central bank allowed the rupee to fall 15 cents to 134.25 to the US dollar Tuesday.  (Colombo/August 25 2015)

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