What became of the Dollar?
Today, the economy of our country is an important topic. When talking about the economy these days, the first thing that comes to mind is the ‘dollar.’ Everyone knows about the situation with the dollar in Sri Lanka. The economy and the dollar are two things that are inextricably linked. The value of the dollar is a crucial element in this context of import, export, income, expenditure, and debt.
The rise and fall of the dollar value is a normal economic phenomenon. But the sudden decrease in the dollar, which was continuously rising, is a significant situation. This situation is widely discussed among analysts.
What could actually be the reason for this? Analysts present various types of reasons related to this. Let's talk about some of them.
They say that the new income tax policy imposed by the government has led to a change in the dollar. Due to the imposition of income tax, the amount of money to be spent on household goods and services decreases to some extent. The reduction of this in individual houses as a whole economy, the expenditure on goods and services of the whole economy is reduced. Then the demand for dollars decreases due to the decrease in import costs. This can be taken as one reason.
Another reason is interest rates. The recent increase in interest rates by the government is the reason for the decrease in investment. Therefore, the demand for goods and services also decreases due to investment. Hence the demand for dollars also decreases. Accordingly, the value of the Sri Lankan rupee is strengthened.
Also, a positive foreign exchange can be seen in the interbank market. More than forty billion dollars of foreign currency has been exchanged in the interbank market. Before it used to be around eight to ten billion dollars. Therefore, this is a positive situation to strengthen the Sri Lanka Rupee.
Foreign direct receipts also increased to seven billion dollars. For that, increasing the supply of dollars is a positive situation for our economy.
If we talk about the stock market, more than three billion dollars of direct investments have been received. This means that the supply of dollars to the government and private companies has increased.
All these reasons show that the rupee has strengthened to some extent recently. It is impossible to say what will happen in the future. We hope that the economic situation will improve in the future.
Harshanie Erandika Liyanage
Faculty of Management and Finance
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