ZCZC
BCN-13
SRILANKA-US-ECONOMY-CURRENCY
Sri Lanka calls for global coalition to tackle rising dollar
COLOMBO, Oct 23, 2018 (BSS/AFP) – Sri Lanka on Tuesday called for a
“coalition of the willing” to help stabilise free-falling emerging market
currencies around the globe, as the beleaguered rupee slumped to fresh lows.
The island’s currency bottomed out at a record-low 174.12 rupees to the
dollar, resisting a slew of measures by policymakers to arrest its steady
decline.
The rupee has shed more than 12 percent of its value this year and Sri
Lanka fears it could slide further as US sanctions squeeze Iran, the island’s
chief source of oil.
A stronger dollar has made it difficult for emerging markets to repay debts
and battered global currencies from Turkey to India and Argentina.
Finance Minister Mangala Samaraweera invited those nations experiencing
currency crises to visit Colombo and hash out a strategy.
“The rise of the dollar is having a serious impact on our currencies. We
are not the only one affected,” he told reporters in the Sri Lankan capital.
“I want to build a coalition of the willing to deal with this problem. I
don’t see the global situation improving any time soon.”
Washington pulled out of a landmark 2015 nuclear deal with Iran in May and
has been reimposing punishing sanctions on the Islamic republic, targeting in
particular its financial system.
Iran not only supplies Sri Lanka with most of its oil, but is one of its
chief buyers of the island’s celebrated tea.
Samaraweera has warned that blockading Iran will have ripple on effects on
Sri Lanka, which has been unable to stop the rupee from nose diving.
Last month, Colombo curbed its state institutions and public servants from
importing cars to reduce the outflow of foreign capital.
Banks were also ordered to restrict lending for purchasing overseas and
consumer goods, but the rupee has continued its decline.
In August, the government substantially increased taxes on small cars to
discourage imports, but officials said there was still pressure on foreign
exchange reserves to finance big-ticket imports.
BSS/AFP/SR/1935 HRS