Sri Lanka to strive for market driven exchange rate

Sri Lanka will strive for a market driven exchange rate in line with the flexible inflation targeting framework going forward, Central Bank Governor Dr. Nandalal Weerasinghe said.
Accordingly, the anticipated stability in the external sector will provide a conducive environment for businesses to not only recoup but also to reposition themselves firmly in the domestic and/or global market, he pointed out.

Dr. Weerasinghe stated that under a flexible exchange rate regime, the Sri Lankan rupee will not be a “one-way bet” and will move in both directions.
Addressing the CFA CEO Forum, the governor suggested that to fully reap the benefits of the improved external sector resilience, there needs to be concerted policy initiatives and a drive by stakeholders to expand and diversify exports while also attracting Foreign Direct Investments (FDIs) into tradable sectors. 

“Being located in South Asia and on a key maritime route, Sri Lanka could benefit immensely if it improved its trade linkages with regional counterparts,” said Dr. Weerasinghe.
He pointed out that such initiatives, if carried out in a timely manner, could set off a spiral of improved export performance feeding back into the economy as improved resilience of the external sector and thereby creating positive spillover effects on the overall macroeconomic performance.