Harsha de Silva, a Parliamentarian of the Samagi Jana Balawegaya, says exporters are deliberately delaying the release of their export earnings into the country in the hope that the rupee will depreciate further. At the same time, importers are making strong efforts to obtain dollars quickly, fearing that the value of the US dollar could exceed the Rs. 375 mark. According to him, this situation has caused a sharp decline in foreign exchange liquidity in the market.
Revealing that the transaction system in the financial market has collapsed unlike ever before, Dr. Harsha de Silva said, “Today, there is not even a specific exchange rate in the market. There is not a single bid or offer.”
He further claimed that most foreign exchange transactions taking place today are limited to a monopoly involving the Central Bank. In such an environment, he questioned how the government expects to attract foreign investment for mega projects such as the Colombo Port City amid a non-transparent pricing mechanism.
Looking ahead, Dr. Harsha de Silva warned that, in order to ease the crisis and stabilize the market, the government may be forced to take a difficult policy decision to raise interest rates by 50 to 100 basis points within the next week.
While acknowledging that such drastic measures may be necessary to restore market confidence, he stressed that the adverse economic impact would ultimately have to be borne by the general public.
Warning that the collapse of confidence in Sri Lanka’s foreign exchange market is pushing the entire financial system into a “vicious cycle” of crisis and uncertainty, Dr. Harsha de Silva made these remarks in a special statement on the current market situation.
He also pointed out that the increase in the selling price of a US dollar to Rs. 354 on Wednesday (21) clearly reflects the rapid depreciation of the rupee and the severe pressure on the foreign exchange market.
Dr. Harsha de Silva emphasized that the present issue is not merely an economic problem but a structural crisis. According to him, financial markets do not operate on political promises or assurances, but primarily on trust.
“Markets operate on trust. If trust in the market is broken, the entire market system collapses,” he said, noting that both the foreign exchange market and the rupee market have been severely affected by the erosion of confidence.
He further noted that although the government has repeatedly stated that it will not allow the country to fall into a recession, such political statements alone are insufficient to stabilize investor sentiment or rebuild confidence. Investors and market participants, he said, are looking for transparent and credible economic signals rather than political messaging.
Dr. Harsha de Silva also warned that any increase in interest rates would sharply raise the government’s borrowing costs and interest burden, which could eventually lead to a heavier tax burden on the public.
