Ceylon Chamber hopes CB’s exchange rate action will ease dollar shortage

The Ceylon Chamber of Commerce yesterday commended Central Bank Governor Ajith Nivard Cabraal and his team for permitting greater flexibility in the exchange rate and expects the move would significantly ease the shortage of dollars in the market.

The Central Bank on Monday devalued the rupee by 15 percent against the US dollar with immediate effect. The buying and selling rates of US dollar yesterday was Rs.225 and Rs.229.99, according to the exchange rate data released by the Central Bank.

The Ceylon Chamber said permitting greater flexibility in the exchange rate had been proposed by the Ceylon Chamber, on its own and along with other chambers on numerous occasions in the recent past. 

“Hence, the Chamber is pleased to note this announcement by CBSL and believes it will contribute significantly to ease the shortage of dollars currently experienced,” the Chamber said.
“This, along with the move to increase the additional incentive offered to migrant workers should help to attract more remittances from this category, reversing the sharp drop in inflows seen from this source in recent months,” it added.

The Chamber also pointed out that a more market-oriented exchange rate would enable both export and tourism sectors to become more competitive while protecting their margins against escalating costs. 

“Further, it should also discourage unnecessary imports easing the pressure on foreign currency reserves,” it added.

Meanwhile, the Chamber also hopes that the government will favourably consider the other recommendations made by joint chambers this week such as introducing market-driven pricing for fuel, gas and electricity, commencing a pre-emptive debt restructuring process and engagement with the International Monetary Fund.