Rupee rescue cost nearly US$500 million from reserves after delayed Central Bank action, Udaya Gammanpila warns.
Rupee rescue measures taken too late forced Sri Lanka to release nearly US$ 500 million from reserves, former Minister Udaya Gammanpila has claimed.
Addressing a media briefing, Gammanpila said the Central Bank’s delayed intervention to stabilize the rupee caused a sharp decline in the country’s foreign reserves.
He stressed that it was a serious mistake for the Central Bank to wait until the rupee depreciated to the Rs. 353 level before acting.
Although the government and the Central Bank Governor have claimed success in stabilizing the rupee, Gammanpila warned that the current stability is highly likely to be temporary.
He pointed out that the responsibility for stabilizing inflation, the exchange rate, and interest rates lies with the Central Bank of Sri Lanka.
Gammanpila said it was deeply problematic for the Central Bank to remain silent while allowing the rupee to drift like a broken kite.
He further argued that if the Central Bank had intervened properly at the early stage of the rupee’s collapse, there would have been no need to release such a large amount of foreign currency into the market.
According to the former Minister, the release of nearly US$ 500 million has depleted reserves unnecessarily.
He warned that because the present stability was achieved through delayed measures, the economy may face further risks in the future.
