April 02, Colombo (LNW): Five prominent export associations have jointly urged the authorities to address the significant challenges arising from the recent appreciation of the Sri Lankan rupee against the US dollar.
Highlighting key concerns, including restrictions on foreign currency movement among commercial banks and mandatory conversion of export earnings into local currency, the Exporters Association of Sri Lanka, Joint Apparel Association Forum of Sri Lanka, National Chamber of Exporters, Tea Exporters Association, and Sri Lanka Association of Manufacturers and Exporters of Rubber Products issued a collective statement to the media.
“The appreciation of the rupee has rendered our exports more expensive for international buyers, directly impacting our competitiveness in the global market.
This situation has escalated operational costs, necessitating adjustments in line with the country’s heightened inflation,” the associations emphasised.
Expressing concern over the rapid appreciation of the rupee, which has fallen below Rs. 300 per US dollar since March 19, the associations underscored the threat to business sustainability and employee livelihoods.
Despite the rupee’s appreciation, the associations noted that the high cost of living persists, putting continued pressure on worker wages.
Furthermore, they pointed out that the timing of the rupee’s strengthening coincides with weak global demand for merchandise exports and stiff competition from other countries.
The associations raised objections to the Central Bank of Sri Lanka’s policy, enacted through Gazette No.2251/42 on October 28, 2021, mandating the conversion of foreign exchange receipts into rupees within a specified timeframe.
They argued that this policy restricts exporters’ flexibility in planning currency conversions, often resulting in conversion at an overvalued exchange rate and placing additional strain on export operations.
In light of the evolving economic landscape and positive foreign exchange reserves, the associations deemed the continued enforcement of the mandatory conversion policy counterproductive.
They stressed the urgent need for the Central Bank to reconsider and revoke the aforementioned gazette to create an environment conducive to the growth and competitiveness of Sri Lanka’s exports.
“Addressing these policy concerns is essential to laying the foundation for sustainable economic development, ensuring employment security for citizens, and fostering the continued prosperity of our nation,” the associations concluded.
