Siyambalapitiya assures depreciation of rupee temporary, market-driven

State Finance Minister Ranjith Siyambalapitiya ruled out concerns about the recent depreciation of the rupee, assuring the public that it is a temporary situation driven by fluctuations in supply and demand. 

Speaking to journalists yesterday he stated that the Government has allowed the value of the US dollar and the rupee to be determined based on market dynamics.

Explaining the situation, Minister Siyambalapitiya highlighted there were around $ 750 million in Sri Lanka’s Development Bonds (SLDBs) and during the domestic debt optimisation (DDO), it was agreed that the value of these bonds should be paid in Sri Lanka rupees, leading to them being bought with dollar deposits. Consequently, the banks are now required to collect this amount of dollars to fulfil their commitment to depositors when they need it.

“To accumulate the required dollars, banks may limit the release of the dollars they have received to the market,” he said.

However, the Minister clarified that some portion of the dollars can still be bought from the market. .

He emphasised that this situation, coupled with other factors, has led to the recent depreciation of the rupee and an increase in the value of the dollar. 

The State Minister reiterated that this situation is temporary and is primarily influenced by supply and demand dynamics.

“Although the depreciation of the rupee is a short-term fluctuation, the Government remains committed to implementing measures to stabilise the economy and ensure its sustainable growth,” he asserted.

During the year up to 28 July 2023, the Sri Lanka rupee appreciated against the US dollar by 10.3%, down from appreciated against the US dollar by 11.7% in the previous week.