The Frontline Socialist Party says that the rumor that the economy is stabilizing and the rupee is strengthening is baseless and fraudulent based on the slight increase in the value of the rupee.
The frontline Socialist Party’s Education Secretary Pubudu Jayagoda said this in a press conference held on the same day, criticizing Ranil Wickramasinghe’s statement on the current economic situation in Parliament.
He further said:
“These people are saying that the value of the rupee is increasing because the value of one dollar reached the limit of 340 rupees last week from 360 rupees. Sri Lanka is not a country with a fully floating exchange rate, but a country with a controlled nominal exchange rate system. The determining factor of the foreign exchange rate in such a country is the interbank exchange market. That means supply and demand of dollar transactions between banks. In order for the value of the rupee to strengthen against the dollar, either the receipts of dollars should increase and the demand for dollars should decrease.
Otherwise, there will be a huge demand for rupees and the supply of rupees will decrease. Rupees are not relevant here. There is no demand for rupees in any country in the world and there is no shortage of supply because rupees are being printed continuously. If so, the value of the rupee must have increased because of the dollar. The government lowered the demand for dollars. One did this by suspending debt payments and imposing import restrictions. Due to the imposition of import restrictions, many problems arose.
