CB has enough dollars to prevent rising dollar value

Colombo, May 21 (Daily Mirror) - The value of the US dollar and the Sri Lanka Rupee is determined by the supply and demand. If the value of the dollar rises significantly, the Central Bank of Sri Lanka (CBSL) has sufficient dollars to control it, Finance State Minister Ranjith Siambalapitiya said.

The Minister made this statement to the media after a programme held in Dehiowita yesterday.

The value of the US dollar is rising rapidly due to several foreign banks operating in the country buying US dollars from the financial market and the Central Bank of Sri Lanka from the banking system.

Due to the continuous release of dollars to the financial market in the previous years  to keep the value of the US dollar at the limit of Rs. 200, our dollar reserves were exhausted. Also, after allowing the dollar and the rupee to float, the value of a dollar suddenly increased to Rs. 380.

All the facts mentioned in the actual report are not true because the value of the rupee and the dollar is being determined according to the demand and supply and it is being systematically controlled.

Minister Siambalapitiya said the CBSL had bought about 1,620 million US dollars in the first four months of this year and said  there was no need for the CBSL or other foreign financial institutions to buy dollars at this time.

If the CBSL had not bought US dollars, the value of the dollar would have decreased to about Rs. 250 by now. The CBSL bought some dollars to strengthen the exporters, the Minister said.

He also said the CBSL arranged to sell about 50 million US dollars in April.

Accordingly, the Minister said that no one should make decisions thinking that the value of the US dollar will increase or decrease indefinitely, and reiterated that the Central Bank of Sri Lanka is strong enough to maintain the value of the rupee and the US dollar at a certain level.

Hence, there is no need for panic in the financial market due to such false information as the CBSL can control the value of the US dollar at any time as its foreign reserves are now about 5.5 billion US dollars.