Colombo (LNW): The Sri Lankan Rupee (LKR) has been appreciating against the US Dollar (USD) and other major currencies since last week bringing positive and negative results.
The Colombo Tea Auction last week saw a mini storm brewing as substantial quantities went unsold amid the sharp appreciation of the rupee against the US dollar.
Tea brokers said the first sale in March began on a very hesitant note due to the Sri Lankan rupee strengthening in an “unexpected manner”.
“At the commencement of the sale, large volumes of tea were unsold with bids realised being significantly below the percentage appreciation of the Sri Lankan rupee,” said Forbes and Walker Tea Brokers in its weekly tea auction report.
The gold price has come down further this week, as a result of the rupee’s appreciation against the dollar, the Jewellery traders in Sea Street Colombo said.
As per the traders, a 24-karat gold sovereign which was at Rs. 185,000 last week has reduced by Rs. 40,000 whilst a 22-karat sovereign which was at Rs. 172,000 last week has come down by Rs. 38,000. “Currently 24-karat sovereign is now at Rs. 145,000and 22-karat sovereign is at Rs. 134,000,” jewellers claimed.
The reduced prices have boosted sales in Sea Street jewellery shops after a hiatus of almost three years, they noted.
The Colombo stock market remained positive yesterday reinforcing its latest status as the world’s second best performing with improved investor sentiment and activity. Both indices closed with 0.5% gain after dipping in early trading.
Turnover was Rs. 2.5 billion involving 97.4 million shares. Net foreign inflow persisted as well. Year to date the ASPI has gained by 14.3% and the S&P SL20 by 8.7%.
Public Expenditure/Revenue Gap continued to grow steadily over the last two decades and widening of the gap accelerated since 2016. In 2020, COVID-19 made the situation worse.
Public revenues declined much faster against sharply rising expenditure, making it nearly impossible to bridge the gap without radical and painful measures to cut down the cost and increase revenues. We rely heavily on borrowed funds, both foreign and domestic, to fill the ever-increasing deficit.