Sri Lanka watched nervously as India’s rupee plunged, not least because it too suffers from the high current account and fiscal deficit mixture that turned investors sour on its larger neighbour.
Now India’s currency is recovering, and Sri Lanka seems emboldened too, as its central bank today shunned IMF advice and surprised forecasters by cutting rates by half a percentage point. But is it a cut too far? Continue reading »
Count it again
Sri Lanka’s government says its economy will grow at a zippy 7.5 per cent this year, making it the self-styled fastest growing economy in south Asia.
Yet on Friday morning the central bank suddenly and unexpectedly brought interest rates down by half a percentage point, citing fears of a slowdown. Something doesn’t add up. Continue reading »
It isn’t every day that a country cancels a plan to seek $1bn in emergency loans from the International Monetary Fund, just a few weeks after announcing it.
But having unveiled plans to go cap in hand for money earlier in the year, it seems this is just what Sri Lankan President Mahinda Rajapaksa is about to do, following a row with the IMF. So what exactly is going on? Continue reading »
Having been forced into a dramatic interest rate hike earlier this year to fend off a balance of payments crisis, Sri Lanka’s central bank has made more small waves in the south Asian tourist island this morning, with a rate cut.
The move caught out local analysts, as there had been no hint of a change in policy in recent weeks. Continue reading »