BY EDWARD THEOPHILUS

People who know the history of the Sri Lanka rupee would not panic about the surprising changes if the sudden change in foreign and domestic value of it because of the changes in the economy after the Covid-19 backwardness as many has been incurred to the economy. The Sri Lanka rupee value gradually commenced to fluctuating the results of several reasons such as the change of the world economic prospectus,  decline in tourism development and downward trend of export revenue. This situation created as a result of uncontrollable reasons to the government of Sri Lanka and policy actions of the Central Bank further affected the opportunities to improve Sri Lanka rupee, the temporary postpone of repayment of debts has limited the opportunities to come up of the currency value. If debt repayment has been continued Sri Lanka rupee would not face to decreasing trend.   

The history of the Sri Lanka rupee has displayed how its value fluctuated since 1930s and it has been vulnerable to various factors such as economic, social and cultural incidences.  Before beginning the use of the Rupee, Sri Lanka was gradually adapting to RIX Dollars and it was changed as required by the British controllers. Under the Currency Board System, the Sri Lanka rupee was strongly backing from the British pound and the situation unexpectedly changed the official depreciation of the British pound in 1967. Sri Lanka had to officially devalue its currency unit by a higher percentage than the British currency devaluing.  In this environment advisors of the IMF concluded that the Sri Lanka rupee should be linked to the US Dollar and since then the stability of the Sri Lanka rupee fluctuation has become a natural situation and maintaining a higher value was a dream for many years, after 1978 changes in the peg system, the Sri Lanka rupee became like an uncontrollable financial instrument that administered by the country. In this environment Sri Lanka haven’t had sufficient foreign currency reserves to protect the currency value.

During the British rule the Sri Lankans had limited the international transactions and the main factors related to the demand for Sri Lanka’s rupee was importing goods and services and this situation was to Asian countries and Sri Lanka had been in a stable situation because its needs were limited. The foreign currency demand and supply was in a manageable situation. The Beginning of the Central Banking System in 1951 which was given four major objectives that were lost at the beginning by the mismanagement of monetary board members before 1955, and the control of the Central bank lost in 1956. In this situation the environment created after the Korean war cannot under estimate. Since 1956 Sri Lanka’s rupee has been fluctuated by various international and domestic reasons, the knowledge of this situation was too little it was showing the people were too much praising economically disadvantaged policies. When Dr N.M. Perera became the Minister of Finance who could not play a cardinal role to achieve a miracle increasing the external value of rupee and attempted to maintain drastic controls that were like an attempt to keep a bird in a cage.

There were many opportunities for Sri Lanka to change the economic environment, especially concentrating on foreign exchange earnings and restructuring the economy to address economic issues. Despite the changing these factors related to contents of Sri Lanka rupee, politics of ruling parties significantly mainspring the declining value of Sri Lanka Rupee. The education of the country misled people to praise socialism without knowing the negative impact.  Political system had shown a political displacement with allegorical views of political parties. Especially JVP had many stupid views in relation to management of the economy and they haven’t had any knowledge about rupee value. The public addresses of JVP leaders seem they never talk about strengthening of rupee value, increasing foreign reserves and other vital issues are not talking pints of them.

J.R administration admitted that the Sri Lanka rupee should be exposed to a peg system subject to turning more exchange earning by methods of bringing foreign investments, developing tourism, promoting non-traditional exports, improving the quality of exports and many others, but opposition political parties especially JVP and other Marxist political parties had faith on stupid views, which were rejected by the world.  They have no logical policies for the improvement of the value of Sri Lanka rupee and the left political parties to needed to develop positive policies to stabilise Sri Lanka rupee.  The main supportive factor to stabilize the Sri Lanka rupee is earning more foreign exchange than the demand and the excess transferring to reserves and building a healthy reserve level such as more than $ 10 billion. If this policy works in the country, the changing contended of the Sri Lanka rupee will have an upward trend.

Policy making to achieve this situation is the hardest task for political parties and the government policy officers, because all countries in the world make positive attempts to increase exchange reserves through competitive earnings. These efforts could not be done by a political party such as JVP which was responsible for the decline in the Sri Lanka rupee by the negative work of them and destruction of the economy by many annihilations.

If JVP wants come to power they should be good policy people to improve the domestic and foreign value of Sri Lanka rupee. When established the Central Bank of Sri Lanka it had very good objectives on the foreign and domestic value of Sri Lanka rupee, however, the act of Central Bank has been subject to changes as the bank as the monetary authority has been doing many operations works such as rural credit management, superannuation management, stock market management and many other operational works which should not be done by regulatory authority. I have no idea new act changes proposed and suggested to maintain as a regulatory authority. If the regulatory authority performs market operation activities it could not independently perform regulation services.