SL Ranks 6th In Global Inflation Charts
Posted 31,March

By Chehan Jayasuriya

In Local News

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Sri Lanka moved to the 6th spot in this week’s inflation table, with a staggering inflation rate of 55%/yr on Thursday the 24th of March 2022. Commenting on the issue, economics expert Steve H. Hanke from the Johns Hopkins University in Baltimore, Maryland, tweeted, “To crush inflation & save the rupee, Sri Lanka needs to install a #CurrencyBoard, like the one it had from 1884 until 1950. It worked like a charm.”

The expert noted that last week’s inflation had been measured at 49%/year, adding that since January 2022, the LKR has depreciated 26% against the dollar. Explaining the situation, he stated that the severe balance of payments crisis and recent fuel price hikes are sinking the rupee.

A currency board is an extreme form of a pegged exchange rate. Management of the exchange rate and the money supply is taken away from the nation’s central bank if it has one. In addition to a fixed exchange rate, a currency board is also generally required to maintain reserves of the underlying foreign currency.