Cabraal: No relationship between money printing and rupee depreciation
State Minister of Money and Capital Markets Ajith Nivard Cabraal said yesterday that there was no relationship between money printing by the Central Bank of Sri Lanka and the depreciation of the local rupee in the foreign currency market.
Minister Cabraal made this comment while responding to questions during an interview on Swarnawahini television.
When asked whether the value of the Sri Lanka rupee showed a negative correlation to a surge in money printing by the Cental Bank as the Opposition claimed, the state minister replied, “Generally, people say it maybe because they don’t know. The issue is when those that claim to be in the know of these matters also say the same thing.”
When asked whether this trend would continue to have an impact on food inflation thus passing the burden to the masses, Cabraal said, “We are mindful of the prices of commodities and we make decisions accordingly to address such issues. As a result of such policy action you see prices of goods and services come down and stabilize after having increased temporarily.
“We forecast that the rupee will value at around Rs.180 by end 2021 and if coronavirus threat reduces as expected, we should be able to achieve an economic growth rate of 7% by end of 2021’, the state minister opined.
“The value of the rupee against the US dollar has started to gradually strengthen again, so it won’t have much of an impact. It will turn around well. My advice is; get on with your activities according to your methodologies without being nervous about it, then no issue will crop up,” he said.
(Source: The Island – By Sanath Nanayakkare)
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This guy is the anti-thesis of Adam Smith, father of modern economics, who published his masterpiece, ‘The Wealth of Nations’ in 1776.
In the modern paper money era, a currency debasement is equal to printing more money to repay debt. But the production of excess money leads to inflation as well as depreciation of the exchange rate.
This is exactly what is going-on in our present day economy.
This is Cabronomics a new discipline of thought and analysis Macroeconomics.