Sri Lankan rupee depreciates against USD, British pound and Indian rupee by more than 10%

Food inflation recorded at 11.5 percent in August 2021

Given the cross currency exchange rate movements, the Sri Lankan rupee (LKR) depreciated against the US dollar by 10.1 percent, against the pound sterling (GBP) by 11.4 per cent and the Indian rupee by 10.3 per cent, during the year up to 03rd September 2021, the Weekly Economic Indicators report released by the Statistics Department of the Central Bank of Sri Lanka showed.

Referring to the Real Sector, the report said.” CCPI based headline inflation (Y-o-Y) increased to 6.0 per cent in August 2021 from 5.7 per cent in July 2021 due to monthly increases observed in prices of items in both Food and Non-food categories.”

“Food inflation (Y-o-Y) and Non-food inflation (Y-o-Y) recorded at 11.5 per cent and 3.5 per cent, respectively, in August 2021.”

“During the first half of 2021, domestic tea production increased notably in comparison to the corresponding period of the previous year owing to favourable weather conditions and prices.”

“Production of rubber also increased in response to high market prices while coconut production increased considerably due to the lagged effect of favourable weather conditions prevailed during latter part of 2020.”

“During the period under review (28.08.2021 to 03.09.2021), crude oil prices were on a largely upward trend. Prices were driven by supply concerns due to Hurricane Ida in the United States and on concerns of OPEC+ members regarding any further output increases amid the fourth wave of COVID-19 in some countries. Prices were also supported by favorable weekly employment data from the United States highlighting demand side recovery.”

“Overall, both Brent and WTI prices increased by US dollars 0.18 per barrel and US dollars 1.12 per barrel,

respectively, during the period,” the report said.

As for the Monetary Sector it said: “Weekly AWPR for the week ending 03rd September 2021 increased by 7 bps to 6.01 per cent compared to the previous week.”

“The reserve money increased compared to the previous week mainly due to the increase in deposits held by the

commercial banks with the Central Bank.”

“The total outstanding market liquidity was a deficit of Rs. 181.720 bn by the end of this week, compared to a surplus of Rs. 13.263 bn by the end of last week.”

“By 03rd September 2021, the All Share Price Index (ASPI) increased by 4.31 per cent to 9,316.65 points and the S&P

SL 20 Index increased by 4.47 per cent to 3,494.76 points, compared to the index values of last week.” the report said.

The Statistics Department noted that the gross official reserves were estimated at US dollars 2,805.9 million as at end July 2021.