The Joint Apparel Association Forum (JAAF) has stated that the recent decline in the value of the Sri Lankan rupee should be understood within the broader context of global challenges, including ongoing conflicts in the Middle East, escalating global fuel prices, and rising shipping expenses.
JAAF emphasized that the depreciation of the rupee should not be misconstrued as an indicator of economic decline in Sri Lanka. This viewpoint aligns with the observations made by Central Bank Governor Dr. Nandalal Weerasinghe, who remarked that fluctuations in the exchange rate should not be the sole determinant of the country’s economic performance, as currency depreciation can also bring about several beneficial effects.
Additionally, the Central Bank Governor highlighted that Sri Lanka is not experiencing these pressures in a vacuum. Recently, the Indian rupee has also faced significant depreciation due to soaring oil prices, ongoing capital outflows, and a stronger US dollar. While the Sri Lankan rupee has seen a 4.8% drop against the US dollar, the Indian rupee has depreciated by 6.4%, the Nepalese rupee by 6.2%, and the Indonesian rupiah by 5.2%. This trend indicates that currency depreciation is currently a widespread phenomenon across both global and regional landscapes, contrasting with 2022 when Sri Lanka’s currency issues were largely attributed to a domestic economic crisis.
Felix Fernando, Chairman of JAAF, stated, “The recent fluctuation of the rupee needs to be viewed in the right context. This is not an issue unique to Sri Lanka. Global factors, such as instability in the Middle East, increased fuel costs, and rising shipping rates, are exerting pressure on currencies in both emerging and developed markets. Countries like India and others are also witnessing similar currency depreciation, illustrating that this is part of a broader global adjustment.”
Fernando further noted that if a weaker rupee is managed with stability and discipline, as is currently the case, it could enhance export competitiveness and bolster Sri Lanka’s external economic position.
“A depreciating rupee does not signify an ailing economy. For export-driven sectors like apparel, a more favorable exchange rate can increase competitiveness, helping to safeguard jobs, enhance foreign exchange earnings, and support the overall economy. As Sri Lanka seeks to build reserves and attract more foreign currency, exporters will play a vital role,” Fernando added.
JAAF concluded that the nation should aim to sustain confidence, prevent speculation, and bolster industries that contribute to foreign exchange generation. The Association also noted that a competitive exchange rate, paired with stable policies, efficient logistics, and reduced operating costs, can aid Sri Lanka in safeguarding its recovery while enhancing its presence in global markets.
Photo caption: Felix Fernando, Chairman, JAAF
Financial Chronicle Biz English | Sri Lanka Business News.
