Governor of the Central Bank of Sri Lanka (CBSL) is to liberate the currency market to respond to international price movements, CBSL Governor, Arjuna Mahandran said last week.
In an interview with CNBC recently, the Governor pointed out that the Central Bank was looking at liberating the currency market in order to ensure that it becomes more market-driven.
“There’s a great opportunity here. First of all, I think we need to get the prices right. That’s why we’ve liberated the bond markets, and we’re also looking at liberating the currency market and see that prices become much more market driven than they have been in the past,” he told CNBC.
He stated that the CBSL intended to shift the earlier system where prices were controlled to a market driven fashion so that Sri Lanka could respond to international price movements, particularly in the pricing of energy, electricity and fuel. “All these prices have to be necessarily market driven so the economy becomes flexible and is able to absorb any external punches as and when they arrive from overseas,” Mahendran had said.
When asked whether that would mean that the interest rates would be low, he stated that he would not comment on it at the moment. “I’m not willing to pursue that right now, but I made the comment earlier that it depends on the stability of the government,” he said.