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» My Port Folio Bleeding But Its just the Begining Of..
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyToday at 10:09 am by pathfinder

» අනං මනං! #/+?.<>
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyToday at 7:50 am by ruwan326

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyYesterday at 3:58 pm by The Invisible

» Banks, Finance & Insurance Sector Chart
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyYesterday at 3:51 pm by The Invisible

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» Browns Investments update
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» LOFC Initiating Coverage - STRONG BUY - 29 03 17 - FC Research
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» "පියසේනට දැං සනීපයි..."
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Jul 19, 2019 10:47 am by Yin-Yang

» What's going to happen
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Jul 19, 2019 6:26 am by serene

» TJL.N0000 (Textured Jersey Lanka PLC.)
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyThu Jul 18, 2019 11:50 am by serene

» CFVF - First Capital
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyThu Jul 18, 2019 7:43 am by serene

» විද්‍යාව මිස්ගේ පාඩම...
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyWed Jul 17, 2019 7:27 am by sanjulanka

» Trading Journal
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyTue Jul 16, 2019 11:50 pm by pathfinder

» වචන නම් අපේ ඒත් තනුව ?????????
Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyTue Jul 16, 2019 8:08 pm by Rana

» Access Engineering AEL Technical Analysis
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» Tourism sector
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» LFIN - LB Finance
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» අපි නොදන්න චෙස් කිව්වලු !
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» Stock Market to stay Bullish
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» Is an emoji a word or a gesture?
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»  Rajgama Heroes !
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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptySun Jul 07, 2019 12:25 pm by dhanurrox

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Jul 05, 2019 6:11 pm by serene

» Easter Sunday Attack and Sri Lanka
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» First capital holdings
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» What to Analyse
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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor EmptyFri Jun 28, 2019 7:46 am by serene

» AAIC.N0000
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» Happy Father's Day !
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» Re: Financial reports Q1-2019
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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor

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Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor Empty Sri Lanka rupee slightly undervalued, REER index below 100: CB Governor

Post by The Invisible on Sat Oct 27, 2018 6:49 am

ECONMYNEXT - Sri Lanka's rupee is now below 100 on a real effective exchange rate index after recent depreciation, Central Bank Governor Indrajit Coomaraswamy said.

"The REER is now a shade under 100," Governor Coomaraswamy told a business forum organized by Asia Securities, a Colombo-based equities brokerage, earlier this week.

"It helps exporters, and helps import substitution industries."

A falling currency mainly helps exporters by cutting real wages as salaries take time to catch up, providing a subsidy at the expense of the working class, pushing up profits of businessmen and helping them avoid innovation and capital investment that would have forced them boost labour productivity, analysts say.

Prices will move up first in exported and imported (traded) products, with raw material prices also moving up.

The profits real salary cut will remain until wages catch up and prices in non-traded sectors move up.

In countries like Sri Lanka the lack of market pricing on energy and utilities like water also gives exporters an additional subsidy at the expense of energy retailers or taxes of the state, when the currency falls.

In countries where the currency depreciates every year, there may be a residual advantage as wages may not catch up exactly with currency depreciation which will eventually lead to labour unrest and riots, especially after prices move up in non-traded areas as well, but wages do not catch up.

Coomaraswamy said the pass-through from recent depreciation on domestic prices was less than expected.

Harvests were coming in which was keeping prices competitive.

Analysts say the falling Indian rupee, produced by the Reserve Bank of India, one of the worst central banks in the region, is also helping keep some prices stable. (Colombo/Oct23/2018)
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