An Echelon Media Company
Friday June 14th, 2024

Sri Lanka struggles as Singapore further appreciates currency to counter inflation

ECONOMYNEXT – Singapore Monetary Authority which operates on currency board principles said it will further appreciate the currency from January 2022, after inflation hit 4.0 percent in December 2022 as Sri Lanka struggles to maintain a 200 to the US dollar peg with a 12 percent rise in consumer prices.

The MAS does not print money to impose an artificial interest rate and bust the currency, accommodate supply shocks saying they are ‘cost-push’ but appreciates or depreciates its currency to counter inflation, mostly generated by reserve currency central banks.

MAS said inflation is expected to rise due to “rapidly accumulating external and domestic cost pressures.”

“MAS will therefore raise slightly the rate of appreciation of the S$NEER policy band,” MAS said in its January policy statement.

“The width of the policy band and the level at which it is centred will be unchanged. This move builds on the pre-emptive shift to an appreciating stance in October 2021 and is appropriate for ensuring medium-term price stability.”

MAS tightened policy in January ahead of its usual April policy meeting.

MAS which was an orthodox currency board with a fixed exchange rate became an appreciating currency after the US Fed started to generate excessive inflation.

But now it has a ‘floating’ exchange rates, but fully backed by foreign reserves and no policy rate.

The monetary strategy was devised by ex-Finance Minister and economic architect of Singapore Goh Keng Swee.

Since the break-up of the Bretton Woods system of soft-pegs due to US money printing, the Singapore dollar had appreciated from around 3.0 to 1.3 to the US dollar.

In the period Sri Lanka’s has busted the currency from 5.9 to 201 to the US dollar partly due to ‘competitive exchange rate’ dogma creating social unrest.

Sri Lanka is struggling maintain a 200 to the US dollar peg, due to a fixed policy rate which was raised from 6.0 to 6.5 percent in January. (Colombo/Jan29/2021)

Comments (1)

Your email address will not be published. Required fields are marked *

  1. Rajah.M says:

    In Sri Lanka’s case , KARMA is haunting the government for atrocities inflicted on the tamils in the north and muslims largely in the south.

View all comments (1)

Comments (1)

Cancel reply

Your email address will not be published. Required fields are marked *

  1. Rajah.M says:

    In Sri Lanka’s case , KARMA is haunting the government for atrocities inflicted on the tamils in the north and muslims largely in the south.

Sri Lanka opposition leader proposes Grama Rajya system in addition to 13A

Opposition leader Sajith Premadasa (r) – File photo

ECONOMYNEXT — Sri Lanka opposition leader Sajith Premadasa has proposed devolving power to the village level through a Grama Rajya system in addition to implementing the 13th amendment to the constitution.

Speaking at an event in Jaffna on on Wednesday June 12, Premadasa said all provinces will benefit from the 13th amendment.

“Whatever one’s ethnicity, religion, status or region, this country has citizens of equal level. They’re all Sri Lankan citizens.

“There is no division or grouping.  As we give you and every other province what you should be given through the 13th amendment, we must implement a Grama Rajya system,” Premadasa said, addressing a crowd of school children and other attendees.

Premadasa’s assurance of implementing the 13th amendment has already drawn some protest in the south.

A collective of civil society organisations held a protest outside the office of the leader of the opposition in Colombo on Thursday June 12.

Calling itself the ‘Coalition Against Partition of Sri Lanka’, the group carrying national flags marched up to the opposition leader’s office Thursday June 13 morning and demonstrated against the full implementation of the 13th amendment.

“We arrived here today to hand over a missive against devolving police powers, land powers and judicial powers. If Mr Premadasa is inside, come outside,” Jamuni Kamantha Thushara, Chairman of the Citizen’s Movement Against Fraud, Corruption, and Waste, was seen declaring at the site.

“First of all, tell us what we stand to achieve by dividing and giving away the north and east,” said another protestor, warning against bringing the 13th amendment “anywhere here (paththa palaathe)”.

A police officer at the scene the protestors that a secretary to the opposition leader was ready to accept their letter.

“In Kilonochchi, he says the 13th amendment will be implemented. The votes in the north are going to be decisive this election. To win those votes, President Ranil Wickremesinghe, Sajith and Anura Kumara Dissanayake all say they will implement the 13th. We will not allow this country to be divided into nine pieces,” said Thushara.

Ven Balangoda Kassapa Thero, who was arrested on June 06 during a protest against the new Electricity Act, was also seen at Thursday’s protest. The Buddhist monk requested for a debate with Premadasa on the matter of the 13th amendment. (Colombo/Jun12/2024)

Continue Reading

Sri Lanka rupee closes flat at 303.85/95 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed broadly flat at 303.85/95 to the US dollar on Thursday, from 303.80/304.00 to the dollar the previous day, dealers said. Bond yields were down.

A bond maturing on 15.12.2026 closed at 10.00/30 percent, down from 10.20/40 percent.

A bond maturing on 15.10.2027 closed at 10.60/75 percent.

A bond maturing on 01.07.2028 closed at 11.00/15 percent, down from 11.15/40 percent.

A bond maturing on 15.09.2029 closed at 11.80/85 percent.

A bond maturing on 15.05.2030 closed at 11.85/12.05 percent, down from 11.90/12.05 percent.

A bond maturing on 01.10.2032 closed stable at 11.95/12.15 percent. (Colombo/Jun13/2024)

Continue Reading

Sri Lanka sells Rs295bn in 2027 to 2031 bonds

ECONOMYNEXT – Sri Lanka has sold 295 billion rupees in 2027, 2029 and 2031 bonds, data from the state debt office showed.

The debt office sold an offered 60 billion rupees of 15 October 2027 at an average yield of 10.30 percent.

All offered 125 billion rupees of 15 September 2029 bonds were sold at 11.00 percent.

All 110 billion rupees offered of 01 December 2031 bonds were sold at 12.00 percent. (Colombo/May13/2024)

Continue Reading