The Sri Lankan rupee has shown some stability against the dollar during the last few weeks due to the Central Bank’s effort for the free flow of rupee. The Central Bank also looks for ways to tighten monetary policy to enhance stability, sources said.

The Sri Lankan rupee had now stabilized between Rs 130/131 level during the last few weeks because of the government’s prudent fiscal discipline, Director General Department of Fiscal Policy Ministry of Finance and Planning K.M.M Siriwardena said.

He said the rupee expects to reach sustained appreciation towards the end of this year. The reasons being that Sri Lankan current foreign reserves have also reached US 7.1 billion, with International Monetary Funds loan, which was a healthy situation for the economy Siriwardena said.

‘If the Central Bank of Sri Lanka maintains its liquidity stance for the remainder of 2012 then elevated funding costs would also contribute to a hardening of yields, ” the report said.Siriwardena said the stability and relaxation variations are conducive for the market conditions, which will pave the way for to stability.

Subsequently this would help to control the inflation and other issues as well.

“Further, the Central Banks forecasting an economic growth range between 6.7 percent and 7.2 percent depending on the impact of a drought that has lasted since the beginning of the year, ” Central Bank sources said.

The Central Bank has forecast 7.2 percent economic growth this year, after revising it down in March from the original 8 percent. Growth last year was a record 8.3 percent.

H D H Senewiratne

Source: Daily News