Sri Lanka denies reports economy at risk of exchange rate crisis

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Sri Lanka has denied reports its economy is at a risk of an exchange rate crisis.

The Central Bank of Sri Lanka (CBSL) said in a statement that several international media sites have quoted a new analysis by Nomura Holdings Inc., which shows that seven emerging economies are at risk of an exchange rate crisis.

According to these media sites, Nomura’s analysis lists Sri Lanka as the country that is most vulnerable to an exchange rate crisis.

The article quotes Nomura analysts as saying Sri Lanka had the worst outlook, and “with high short term external debt (US$ 160 billion), [Sri Lanka]’s refinancing needs are large.”

CBSL says given the fact that Sri Lanka’s short term external debt is nowhere near the US$ 160 billion figure that Nomura analysts have quoted, it appears that Nomura Holdings have made a serious computational error with regard to Sri Lanka’s external vulnerability.

As such an erroneous report could to trigger an unwarranted panic amongst investors, particularly in the context of current volatile global market conditions, the Central Bank of Sri Lanka has already written to Nomura Holdings, and requested them to correct this error without any delay. (Colombo Gazette)

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