News
Reserves fall to lowest since 2009, rupee strengthening to be short-lived: report
by Sanath Nanayakkare
Sri Lanka’s Foreign reserves had dropped to USD 4.1bn in March 2021, the lowest since August 2009, on the back of over US$ 4bn outstanding debt payment during April-December 2021 period, a report issued by First Capital Research yesterday said.
According to the report, rupee appreciation is likely to be short-lived considering Sri Lanka’s depleting foreign reserve position, high foreign currency debt repayment requirement and limited funding sources available in the market are expected to further increase depreciation pressure on the currency during 2Q and 3Q.
“We maintain our exchange rate target for 1H2021 at Rs. 196-202 with 2021 year-end target at Rs. 205-215 as mentioned in our ‘Investment Strategy 2021 – January 2021,” the report recalls.
“Sri Lankan rupee appreciated 5% against the US dollar over the last 2 market days reversing the continuous accelerated depreciation witnessed in January-April 2021. On 12th April, Sri Lankan rupee recorded a historical low of Rs. 201:1 US$. Ministry of Finance (MoF) reported on the same day that the government of Sri Lanka entered into a loan agreement with the China Development Bank (CDB) for US$ 500mn and MoF expected the funds to be disbursed during the same week. Following the announcement, the market registered a steep appreciation with mid-rate recording at Rs. 190.9 on April 19,” it says.
The total foreign debt repayment (capital and interest) for 2021 is US$ 6 bn, according to the report.
Meanwhile FC Research believes that the temporary appreciation in USD-LKR, may adversely impact earnings of export companies such as Hayleys, Haycarb, Dipped Products, MGT Knitting Mills, Teejay Lanka, Expolanka Holdings etc. in the short term.
“However, considering the potential future currency pressure, we expect an overall depreciation of approximately 12% for the rupee providing a significant gain for companies with foreign currency revenue”, FC research predicts.
Prime Minister Harini Amarasuriya yesterday sad that the Executive Presidency would be abolished, in line with the NPP’s election manifesto.
Speaking in Parliament, in response to a question raised under Standing Order 27/2 by Opposition and SJB Leader Sajith Premadasa, the Prime Minister said the abolition would take place through a proposed new Constitution.
She added that preliminary work on drafting the new Constitution had already begun, with previous committee reports and other proposals being studied to guide the process.
“A concept paper on the draft will be presented to the Cabinet,” Amarasuriya said, noting that a formal study has been initiated on abolishing the Executive Presidency.
She said that the move cannot be implemented without introducing a new Constitution.
Leader Sajith Premadasa told Parliament yesterday that the suspension of duties imposed on Dr. Rukshan Bellana, Deputy Director of the National Hospital, amounted to a violation of his fundamental rights.
Raising the issue during parliamentary proceedings, Premadasa, who is also the SJB Leader, questioned the decision to suspend the senior medical officer for issuing a statement to the media, particularly on matters relating to children’s medicines.
He said health was a fundamental right and noted that two children had reportedly died, stressing that the focus should be on accountability over the incident rather than penalising a medical professional for speaking out.
Premadasa criticised the authorities for suspending Dr. Bellana solely for communicating with the media, asking whether such action constituted justice for families who had lost their children.The Opposition Leader said silencing officials, who raise concerns, undermines fundamental rights and does not address the underlying issues related to patient safety and public health.
Acting Deputy Director of the Colombo National Hospital Dr. Rukshan Bellana has been suspended.
A letter, issued by the Ministry of Health, says preliminary investigations by the Ministry of Health has revealed that Dr. Bellana, as a government medical officer holding a responsible position, made statements to the media, without approval, in a manner that created a controversial situation in the country and unrest among the public.
The letter further stated that formal disciplinary action will be taken in due course regarding this matter.
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