Rise in US interest rates, capital move out to affect Sri Lanka - Economist | Daily News

Rise in US interest rates, capital move out to affect Sri Lanka - Economist

Following the US presidential election, money has suddenly started flowing out of emerging markets and currencies similar to Sri Lanka have been weakening, which is again causing another round of pressure, Frontier Research CEO Amal Sanderatne said.

Speaking at a corporate gathering held in Colombo recently, he noted that capital could move out of emerging markets with the US interest rate expected to further rise. Speaking on how president-elect Donald Trump can be bad for emerging markets, he pointed out that political risk in US is now higher than Sri Lanka and from a market perspective, President elect Donald Trump is not going to make people’s lives easier. “The US stock market is doing well. However under these circumstances, it could lead to market volatilities.It is going to be hard in a market volatile situation for foreign capital to come to Sri Lanka. But our economy can also see positive results.”

Commenting on Central Bank and its role, he stressed the central bank is on a far better footing in terms of overall macro policy and investor sentiments.

“We have much better management in the Central Bank. The Governor is taking the right approach and he is also highly acclaimed by the international investors.

He said that the country’s debt repayment has however jumped more than four times but this would not be an issue as long as international investors have confidence in the Sri Lankan market. 

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