FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

LISTED COMPANIES

Submit Post


ADVERTISE
Poll

EXCHANGE RATE PREDICTION: 2022

 
 
 
 

View results

ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



Latest topics

» අද රාත්‍රියෙන් පසු, යක්ෂයාගේ හෝරාව ඇරඹේ!
by God Father Yesterday at 9:18 pm

» Sri Lanka Stock Market heading toward ASPI 4500
by God Father Yesterday at 9:14 pm

» Why no power cuts in certain areas of Colombo?
by God Father Yesterday at 8:03 pm

» Breaking News- Kanchana to go to Qatar ; 2 more ministers off to Russia
by samaritan Yesterday at 12:26 pm

» Expolanka to continue its winning streak
by samaritan Yesterday at 9:49 am

» කොළඹ රාජකීය ගොල්ෆ් සමාජය විසින් රජයේ දේපළ අවභාවිත කිරීම
by ddindika Yesterday at 9:33 am

» LOLC to enter the giant Indian Market
by samaritan Yesterday at 9:17 am

» LOLC HOLDINGS PLC (LOLC.N0000)
by CHRONICLE™ Yesterday at 6:46 am

» SOEs within Minimum Programme for Economic Recovery
by CHRONICLE™ Yesterday at 6:44 am

» COVID WAVES: Can there be another Covid-19 wave in Sri Lanka?
by CHRONICLE™ Yesterday at 6:36 am

» Luminex Limited lists on the Diri Savi Board after a capital raise of Rs. 250 Million
by CHRONICLE™ Yesterday at 6:34 am

» Importance of Agroforestry for Sri Lanka
by CHRONICLE™ Yesterday at 6:31 am

» Nivard Cabraal sets record straight on decision to allow flexibility to the rupee
by God Father Sun Jun 26, 2022 11:15 pm

» Baseless accusations against the former Governor Nivard Cabraal
by ChooBoy Sun Jun 26, 2022 10:44 pm

» Heavy losses at CPC whilst LIOC records profit
by ChooBoy Sun Jun 26, 2022 1:32 pm

» Misuse of government property by Royal Colombo Golf Club
by ChooBoy Sat Jun 25, 2022 12:52 pm

» SL Cauvery and Mannar Basins Petroleum Resource Data Revealed
by samaritan Sat Jun 25, 2022 12:00 pm

» Container shipping stocks routed
by target1 Fri Jun 24, 2022 1:32 pm

» Supply Chain Latest: Ocean Freight Rates Are Falling
by target1 Fri Jun 24, 2022 1:26 pm

» Turkish ship leaves Ukraine's Mariupol after grain talks with Moscow
by target1 Fri Jun 24, 2022 11:29 am

EXPERT CHRONICLE™

MARKET CHAT


CHRONICLE™ ANALYTICS


ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

LATEST TWEETS

You are not connected. Please login or register

FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Interview: rate cuts on Sri Lanka’s radar

Interview: rate cuts on Sri Lanka’s radar

Go down  Message [Page 1 of 1]

Sstar

Sstar
Vice President - Equity Analytics
Vice President - Equity Analytics

Interview: rate cuts on Sri Lanka’s radar Ajith-10

With inflation in Sri Lanka tamed to single digits for the longest period on record, there is room to cut interest rates further below current historic lows to steer the country towards its growth target, says its central bank governor.

In the five years since its bloody 26-year long civil war ended, the southeast Asian island nation’s $67bn economy has enjoyed rapid expansion thanks to tourism bouncing back and rising exports of goods such as manufactured textiles, tea and coconuts.

“We think the present policy is appropriate but if we see growth isn’t coming to the level we originally planned – close to 8 per cent – or if we feel inflation is coming down there may be some space for [rates] adjustments to be made over the next year,” Ajith Nivard Cabraal told beyondbrics in an interview.

“Of course we will be watching closely as the last thing we want to do is to give the impression of driving inflation up,” he added.

The Central Bank of Sri Lanka slashed its benchmark repurchase rate by half a percentage point to 6 per cent in January, contrary to the advice of the International Monetary Fund to allow more time for earlier reductions to have an effect on bank lending.

It followed a hike two years earlier to avert a balance of payments crisis and rein in excessive credit growth. Detractors have criticised a ‘stop-go’ policy cycle which they claim is now resulting in subdued growth in credit and private consumption. The latter increased by just 3.2 per cent in 2013 and is possibly a reason why looser monetary policy is on the bank’s radar.

“We are watching demand quite closely as it is an aspect of tension that could arise in our control of inflation,” said Cabraal. “Now we find it’s where we want it to be and therefore we don’t see any major turmoil in the near future”.

In spite of this, Sri Lanka’s economy, one of the fastest-growing in Asia, appears in rude health. Gross domestic product grew by a lower-than-expected 7.2 per cent last year and the Asian Development Bank forecasts 7.5 per cent growth this year. Inflation is pencilled in at 5 per cent – far below the 12 per cent it averaged in the 30 years to 2009.

But there are headwinds. Foreign direct investment was just $1.3bn last year, short of the government’s hope of $2bn. This pales against the $4bn a year the minister for investment promotion has said is required to reach and maintain 8 per cent annual growth.

The investment case for Sri Lanka was dealt a blow this year after the government refused to allow casinos to operate at a resort planned by Australian tycoon James Packer amid fears it would lead to prostitution.

For now, weak levels of FDI leaves Sri Lanka heavily dependent on labour remittances from its overseas diaspora to fund its current account deficit, which ratings agency Fitch expects to narrow to 3.2 per cent of GDP this year. Savings sent home totalled $6.8bn last year, up 13 per cent on 2012 levels. However, with the volume of remittances expected to fall after peaking in 2017 as more Sri Lankans return to their homeland, Cabraal insisted that a gradual ramp-up in FDI would coincide to make up the gap.

In other ways, Sri Lanka is strongly braced to withstand a storm. Foreign exchange reserves are $8.6bn, or six months of import cover, giving the central bank plenty of latitude to prevent too sharp a movement in the rupee.

Unlike other emerging markets that now appear vulnerable to tapering of the US Federal Reserve’s stimulus programme, the country deliberately did not tap the swell of dollars when quantitative easing began in 2008. Instead, regulators kept in place rules restricting foreign holdings of government debt instruments to 12.5 per cent of the overall market.

Cabraal said he was “quite confident” that little portfolio investment in shares and bonds would flee the country should global monetary conditions tighten.

“The time to deal with the situation was when QE commenced, not when it was tapered off,” he said. “Even though there was a large amount of money floating around and seeking new investment opportunities we didn’t attempt to receive it here at any cost”.

http://blogs.ft.com/beyond-brics/2014/06/09/interview-rate-cuts-on-sri-lankas-radar/

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum