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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Dollar borrowings send some listed corporates reeling

Dollar borrowings send some listed corporates reeling

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Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Sri Lanka’s listed corporates so far have incurred over Rs.5.7 billion loss as foreign exchange losses due to the depreciation of the Lankan rupee (LKR) against the US dollar, a quick compilation of data by Mirror Business revealed.

Dollar borrowings send some listed corporates reeling Cu410
According to market analysts, as some of the listed companies that have borrowings in US dollars have not released their interim financial reports for the quarter ended March 31, 2012, the cumulative loss is likely to increase.

Since last budget in November 2011, LKR has depreciated nearly 14 percent as the country’s exchange rate policy shifted from an interventionist dollar peg to floating exchange regime.

“The Central Bank should be responsible for the exchange losses some of the companies have incurred. They encouraged corporates to opt for dollar borrowings assuring that the rupee will be kept stable against the dollar,” an analyst who preferred anonymity told Mirror Business.

Sri Lanka allowed the rupee to be determined by the market since Feb. 9 after the Central Bank spent more than $2.6 billion since last June to defend the currency, depleting foreign exchange reserves by a third.

However, he also pointed out that the companies themselves are partly responsible for the exchange losses they’ve made.

“Almost everyone in the country knew that the LKR was artificially propped up and the Central Bank wouldn’t have been able to keep it up against the dollar in the long run. So they should have had some contingency plan for the worse case scenario,” he opined.

While depreciation of the LKR has become a bane for some companies, it has become a boon for several other listed firms including for the country’s commercial banks as well as the export companies.

Banks like Commercial, Hatton National, Sampath, National Development and Nations Trust posted significant increases in their bottom lines, largely boosted by foreign exchange gains.

However analysts Mirror Business talked to were little skeptical about the mid term or the long term sustainability of these exchange gains, as a few of the commercial banks have raised moneys from foreign sources fot capital requirements.

But they also stressed that since banks confront currency fluctuations almost on a daily basis, they will create strategies to tackle any loss stemming from rupee depreciation.
http://www.dailymirror.lk/business/economy/18761-dollar-borrowings-send-some-listed-corporates-reeling-.html

malanp


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

if the ruppee remain at this level, they will not have exchange loss next quarter.

sriranga

sriranga
Co-Admin
Only banks showed gain from the depreciation of rupee in the last quarter.

http://sharemarket-srilanka.blogspot.co.uk/

manula


Vice President - Equity Analytics
Vice President - Equity Analytics
However, he also pointed out that the companies themselves are partly responsible for the exchange losses they’ve made.

“Almost everyone in the country knew that the LKR was artificially propped up and the Central Bank wouldn’t have been able to keep it up against the dollar in the long run. So they should have had some contingency plan for the worse case scenario,” he opined.


How can make the contingency plan??? If company.. want to expand or required any loan/machinery or and buying from overseas will go as dollar rate..any plan can you think..to reduce the work force??.. to reduce the extra expendiutre??

As i know many friends who was thinking to start up of some small scale factories even has to postpone also ...due to machinery prices went up than the quatation..considering the dollar price..

Monster

Monster
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
http://forum.srilankaequity.com/t18065-companies-effected-due-to-rupee-value-depreciation

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