The exchange rate of the Sri Lanka rupee has depreciated by 1.07% against the US dollar in 2009 and had a huge negative effect on the debt service and foreign reserves hampering overall development, a Central Bank source said yesterday.
“It moved from Rs. 113.1398 per US dollar at the end of 2008 to Rs. 114.3844 per US dollar as at end 2009,” the source said.
The volume of inter-bank foreign exchange transactions which amounted to US dollars 14,131.77 million in 2008 decreased to US dollars 10,959.84 million in 2009 recording a significant decline of 22.45% in international trade payments, creating a negative impact on the country’s debt service and foreign reserves, the source added.
The total external debt consisting of medium, long term and short term debt of the country increased to 44.5% of the GDP in 2009 from 37.1% in 2008 as a result. In US dollar terms, the total external debt was increased by 23.5% to US dollars 18,662 million in 2009.
Though the foreign reserves recorded an all time low of US dollars 1,594 million which was hardly sufficient for five weeks of imports in 2008, it gradually improved to its highest level of US dollars 5,097 million –sufficient for six months of imports by 2009, he said.
Reserves that started to decline during the last quarter of 2008 owing to the settlement of oil import bills and repatriation of short term investments continued to drop throughout the first quarter of 2009. Consequently by end March 2009 the reserves reached a low level of US dollars 1.082 million. However, with the ending of the ethnic conflict, the external reserves position started improving since the second quarter of 2009. The situation further improved with the approval of the IMF Stand by arrangement facility of US dollars 2.6 billion in July 2009.