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Sunday October 1st, 2023

Sri Lanka rupee closes at 337/344 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 337/346 to the US dollar Thursday in the spot market after opening at 340/345 to the US dollar, dealers said.

The spot dollar was offered 399 to the US dollar Wednesday, with no bids.

There were some dollars provided for import bills, Thursday dealers said.

There were deals at around 340 to the US dollar in early trade but bids were shifted to around 337 later in the day.

Sri Lanka’s central bank, bought dollars heavily as the rupee appreciated following the lifting of a surrender rule, banks oversold and importers stayed in the sidelines and the rupee appreciated to around 320 to the US dollar.

The rupee weakened in thin trade as banks settled bills in house and tried to cover their short positions.

Some banks were now square, dealers said.
In recent there is around 200 million dollar a month excess that the central bank was able to keep due to negative private credit.

Sri Lanka operated a peg with broadly consistent policy up to March 07, and shifted to a so-called flexible exchange rate or an ad hoc peg.

Up to the ad hoc peg, the central bank had bought dollars through a surrender rule, preventing appreciation and sold back for large import bills maintaining a consistent-policy-peg and only keeping the residual after giving back dollars to demand coming through domestic credit.

Flexible exchange rates, which are neither free floats nor hard pegs, are found in countries with high inflation, high interest rates and if the country has market access, sovereign default.

Several countries with depreciating flexible exchange rates or ad hoc pegs, were able to access capital markets in recent years due to exceptionally loose monetary policy run by the Fed, who have since defaulted or are close to default.

The experience in March shows that if the IMF sets high enough reserve target, the rupee can still depreciate, even if there is negative credit there is a small balance of payments surplus and the central bank has full control of the exchange rate, analysts warn.

In the past, the IMF came in when money and exchange policies came into conflict and forex shortages (balance of payments deficits) emerged.

But now IMF programs themselves contain an inflation target (domestic anchor), which allows inflationary policy, conflicting with a reserve target, triggering currency crises within the duration of a 4-year program. If they have market access they default. (Colombo/Mar15/2023)

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Sri Lanka National Christian Council opposes Online Safety Bill

ECONOMYNEXT – The National Christian Council of Sri Lanka (NCCSL) in a statement on the Online Safety Bill, said that the existing legal regime is adequate to deal with instances of harmful speech, making it unjustifiable to enact such “stringent laws”.

The Council called upon the government to withdraw the bill immediately.

The body expressed “deep concern” over the proposed bill, detailing its potential to curtail freedom of speech and how, according to the Council, the piece of legislature is inconsistent with the principles of democracy.

“The bill proposes the establishment of an entity named the Online Safety Commission without provisions to guarantee its independence and impartiality,” the statement said.

Chapter 3 imposes restrictions on online communication of certain statements, many of which are vague and overbroad, leaving room for executive control and the curtailing of legitimate criticism and dissent that are basic features of democracy, the statement said.

“The laws granting wide discretion to the executive and its investigative agencies with expansive reach have been misused in the past.”

The Council said that the bill was not drafted with the process of public consultation and discussion, which might have ensured the bill would be less draconian in nature.

“The National Christian Council of Sri Lanka calls upon the government to withdraw this anti-human rights and anti-democratic bill immediately.” (Colombo/Sep30/2023)

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Sri Lanka to implement new vehicle revenue licence issuing system

ECONOMYNEXT – A new system of issuing vehicle licences called eRL 2.0 is to be implemented in 5 provinces, excluding the Western Province, from 3 October onwards.

The new system is to be implemented beginning in the North West, South, North Central, Central and Sabaragamuwa provinces, respectively. The existing vehicle licence issuing system eRL 1.0 will continue to be used in the Western Province.

The issuing of revenue licences islandwide at Department of Motor Traffic head offices and regional branches will be temporarily halted on October 2.

The facility of obtaining vehicle permits online will also be temporarily halted on 6 October till midnight.

The Sri Lanka Information and Communication Technology Agency (ICTA) and the Provincial Motor Traffic Departments are working to modernize the current vehicle revenue license issuance system.

The implementation of the new eRL 2.0 system is expected to be an important step in the digitalisation of Sri Lanka. (Colombo/Sep30/2023)

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Sri Lankan Airlines flights cancelled as aircraft grounded

ECONOMYNEXT – State-run SriLankan Airlines has apologized to passengers who were stranded as multiple aircraft were grounded at the same time.

The airline said it has strict procedures which requires aircraft to be grounded when technical issues are discovered.

“Unfortunately, in this case we suffered a number of groundings at the same time,” the airline said.

“We apologize for the disruption and inconvenience caused and assure all our loyal customers that we are working diligently to minimize such occurrences moving forward.”

The airline said it was booking passengers on other airlines while some have been accommodated at hotels. (Colombo/Sept30/2023)

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