Banks cannot provide US dollars even at Rs.345

 

by Sanath Nanayakkare-2022/04/20

All licensed commercial banks in the country are still facing a huge crunch in foreign exchange inflow, although inward remittances can be converted to Sri Lanka rupees at a much higher rate since the Central Bank of Sri Lanka floated the Sri Lanka rupee.

This was revealed in a report released by the Lanka IOC.

It says that exporters are not coming forward for conversion of foreign currency, even at the rates higher than official ones.

Lanka IOC, a subsidiary of Indian Oil Corporation that operates retail petrol/diesel stations in Sri Lanka, says that the local currency has depreciated further and while the Central Bank’s TT selling rate is Rs.330 as of now, the licensed commercial banks are not able to provide US dollars even at the rate of Rs.345.

“Since the Central Bank floated the rupee on 7 March 2022, the local currency has been constantly devaluing against the dollar and currently hovering around Rs. 330 per US$, having shot up from the level of Rs. 203. This has made fuel import much costlier,” Lanka IOC notes.

The company says that rupee devaluation by more than 60% during the last one-month since 7th March 2022, compelled them to again increase its retail selling prices of gasoline by Rs 35/ltr and gasoil price by Rs 75/ltr.

“Even though international prices are stable since last one week amid the surge in COVID cases in China and preparation of the International Energy Agency for releases of oil reserves, the local currency depreciation is significantly increasing the cost of fuel imports”, Lanka IOC says.

LIOC Managing Director Manoj Gupta says, “Unstable currency rates and steep rupee depreciation has directly impacted the landed cost of gasoil and gasoline making them expensive by an equivalent amount per litre. Our current losses are exorbitantly high considering at current exchange rate and international prices leaving no other option but to increase the prices of gasoil and gasoline. In view of uncertainty in the global market coupled with Sri Lanka country risk, most of the suppliers are not participating in the tenders or quoting high premium for supply of gasoil and gasoline. Despite this price increase, there would still be heavy losses being suffered by the company. Lanka IOC has always remained committed towards the economic and social upliftment of Sri Lanka. We are very much disturbed and find it painful to pass on the impact of currency devaluation to our customers, but absolutely left with no option to ensure our sustenance and maintain an uninterrupted fuel supply.”

“We will review the selling prices on a periodic basis and would be more than happy to give some relief to our customers by reducing the prices as and when the situation improves and the currency appreciates and stabilises,” Gupta says.