Financial Times

Lankans in Doha worry over weak currency
Sri Lankan financial circles in Doha are concerned over the way their country's currency has been weakening against the dollar over the past months and attribute the unprecedented trend to rising oil prices in the international markets, according to a recent report in the city's top English-language newspaper The Peninsula.

The Sri Lankan rupee was on Tuesday, July 6 quoting at Rs 102 per dollar. The slide has been an incredible 43 per cent over the past five years, says Asoka Rupasinghe, a Sri Lankan chartered accountant who works with a major bank in Doha.

The rupee-dollar rate was 71 about five years ago. The decline has been worse at around 60 per cent against the British pound over the past five years, said Rupasinghe.

While reports of the rupee losing against the greenback is good news for overseas Sri Lankans as their earnings go up in rupee terms, the trend should actually be a cause of concern as it leads to inflation back home, Rupasinghe is quoted as saying in the paper.

The rate of inflation in the island country was, though, restricted at 4.6 per cent, he said. Sri Lanka is a major importer of oil. "Not only that, all essential items in our country are imported and that explains why every time the crude prices rise in the global markets, the rupee takes a dip," he says.

The decline of the currency has led an increasing number of Sri Lankans in Qatar to route dollar deposits back home. The Sri Lankan government recently came out with a $250m bond issue, minimum subscription for which was $100,000. Rupasinghe said the amount was so huge, no Sri Lankan, in Qatar at least, opted for the issue.

Rupasinghe is critical of his government for keeping the bond issue out of the reach of middle and upper-income overseas Sri Lankans. This is not a prudent policy, he said. Even if the minimum subscription amount was in the range of $10,000-20,000, some people might have considered investing.

That would also have provided an opportunity to middle-income Sri Lankans to join hands and pool in funds for subscription, he said.

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