Exporters urge reasonable depreciation, if no rupee devaluation

(January 20, Colombo, Sri Lanka Guardian) Sri Lanka’s apparel industry, the country’s biggest export sector, says that if rupee devaluation is not possible, the rupee should be allowed to depreciate to a realistic level.

“If it is not possible to devalue the rupee, then the rupee must be allowed to depreciate to a reasonable level,” the head of the Joint Apparel Association Forum, Ajith Dias, told journalists on Tuesday at a seminar organised by the Institute of Chartered Accountants of Sri Lanka on the ‘Global Financial Crisis.’

Exporters say the high rate of inflation in Sri Lanka, together with currency devaluation by buyers of Sri Lankan goods and also competitors, have made Sri Lankan goods uncompetitive in international markets.

The head of the Hayleys Group, one of the largest Sri Lankan exporters accounting for 2.6% of total national export revenue, also expressed similar concerns.

“Relaxing the exchange rate will help the situation, but for whatever reason, if the government cannot do this, then we need to find some other solutions,’ said N G Wickremaratne, chairman and CEO of Hayleys PLC.

“If the rupee can reach Rs 118-Rs 120 to the US dollar, that will mitigate many of our problems. But this must happen immediately, not by the end of 2009,” said Mr Dias. - Sri Lanka Guardian