Govt. assures cautious stabilisation of currency

By Nuwan Senarathna

The United National Party (UNP) yesterday claimed that the Coalition Government is focused on using minimal foreign reserves to manage the currency crunch, assuring that the ongoing measures will cautiously stabilise the rupee.

Speaking at a press conference held at the UNP headquarters, Sirikotha, MP Harshana Rajakaruna revealed that past exercises of defending the rupee had adverse effects on the rupee and the entire economy.

“We cannot use our entire foreign reserves to stabilise the rupee. In 2012, the past regime spent $ 4 billion to defend the rupee, but it still depreciated by 15%. We are now looking at a range of alternative methods to stabilise the currency,” he pointed out. Rajakaruna said the Government only injected less than $ 200 million into the market to prevent the dollar outflows.

“We have been able to manage the rupee by utilising a very small proportion of the foreign reserves because we do not want to take any risks. However, if the ongoing measures do not reflect fast enough to manage the rupee depreciation, then the Central Bank Governor would have to take a call on injecting more foreign exchange to the market,” he added. When asked for the reasons as to why the Government has to curtail imports when its policy is all about social market economy, MP Rajakaruna said that if certain provisions exceed limits, then they would have to intervene to stop the negative impacts to the economy.

He also said that tax reductions are likely to be included in the upcoming Budget 2019 to uplift the living standards of the people.