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Currencies |
| SRI LANKAN RUPEE |
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| Introduction
| Overview | Structure
| History | Factors
affecting change in exchange rates | Daily
trend of Sri Lankan rupee | Weekly
trend of Sri Lankan rupee |
| Introduction |
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Rupee is the ancient Asian currency unit of exchange that still
provides with official currencies of seven Asian nations namely
India, Pakistan, Sri Lanka, Indonesia, Nepal, Bhutan and Maldives,
and two African countries that are Mauritius and Seychelles. All
these currencies are symbolized as common symbol i.e. “Rs” and
“₨” though the
subunits of different rupee currencies may vary. The rupee
currency in Sri Lanka is known as Sri Lankan rupee and is counted
among the only three rupee currencies that use “cent” as their
subunit.
The currency is written in the national
language i.e. Tamil as “ரூபாய”
and in addition to the common symbols also depicted as “Rp” or
“SLRp” for disambiguation. Sri Lankan rupee has been in
existence since 1870 but was recognized as an independent currency
in 1941. According to the ISO 4217 regulation, the currency code
for Sri Lankan rupee is LKR and the currency code is 144.
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Overview
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Sri Lanka, in the recent years, has encountered with strong growth
rates and is one of the expeditiously improving economies of the
world. No doubt, the development process in the country was
lagging behind in the past due to political instability and the
civil war that continued for 20 long years. From 1977 on, the
country started to divert from its socialist outlook and followed
the policy of liberalization and even currently, it has been
opening and privatizing its economy. Sri Lanka is characterised as
an economy largely dependent on domestic trade and facing the lack
of foreign direct investment. The popular garment sector of Sri
Lanka is certainly one of the biggest in the world and is a
substantial source of revenue to the government. The low value of
currency supports the export competitiveness of the country and
helps the country gain edge over competitors.
Sri Lankan rupee was pegged to the US dollar since it was launched but
recently in the year 2003, the currency was floated in the world
market, reason being the poor perfomance of the economy off
lately. Though, this step didn’t prove the right one initially
as the value of Sri Lankan rupee dipped soon after that but within
a couple of years, it got its much needed stabilty and is still
maintaing it. The import-export restriction suggest that the local
currency can be imported or exported for the amounts not exceeding
1000 Sri Lankan rupees. In context of foreign currency
import-export, the amounts with the value above US$ 10000 need a
declaration to get transferred.
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Structure
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Sri Lankan rupee is one of the only three rupee
currencies that use “cent” as its subunit,
though “cent” is a popular subunit of dollar
currencies. It divides one unit of the currency
in 100 equal parts. More denominations in the
currency are issued in the form of paper notes
as compared to the coinage i.e. banknotes are
issued in 7 face values and coins are issued in
5 face values. The banknotes of Sri Lankan rupee
have got distinctive pattern of design on its
reverse side from currency notes of most of the
world currencies, the difference being that
these notes are printed vertically. The
banknotes of Sri Lanka have seen a lot many
changes in context of design and pattern since
they first started to get produced. The design
of the current banknote series in circulation is
based on the theme “Sri Lanka Heritage” and
the images on the notes give a colorful
expression of culture and practices in Sri
Lanka.
The face values in which
the notes are printed include 10, 20, 50, 100,
500, 1000 and 2000 rupees. As most of the
currencies, the banknotes of Sri Lankan rupee
follow different color pattern for each note so
that differentiation among them can done with
ease. The 10 rupees note has green, 20 rupees
note has purple, 50 rupees has blue and 100
rupees note has orange colored scheme. The 500
rupees has a combination of light orange and
purple colors, the 1000 rupees note appears
light green and the newly issued 2000 rupees
note has orange as its main color. The details
of the images on the banknotes are mentioned in
the following
The coins in Sri Lankan rupee are minted in 5 face
values namely 25 and 50 cents, 1 rupee, 2 and 5
rupees. Coins in denominations lower than that
of 25 cents are also circulation but neither
they are minted now nor they are seen
frequently. These 5 coins have got the Armorial
Ensign of Sri Lanka embossed on their obverse
side and their face values along with
country’s name and the year of minting on the
reverse side. The dimension, weight and
thickness of the coins increase depending the
value the coin is possessing. This pattern of
design has been followed since the issue in
1963. Also, there’s a long list of
commemorative coins that had been issued since
the country got independent. Currency management
in Sri Lanka is a function of the reserve bank
of the country named Central Bank of Sri Lanka
that came into existence in 1950. The bank
doesn’t produce the currency currently instead
it gets the banknotes printed and the coins
minted from De la Rue Lanka Currency and
Securities Print (Pvt) Ltd and Royal Mint of
United Kingdom respectively.
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| History |
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The history of currency in Sri Lanka formerly called
Ceylon dates back to 1st century BC when
silver coin punch marked from India use to circulate
in the country. Also, copper coins were minted locally
during this time. With time, coinage from other
countries especially Roman coins started getting
imported on the island and were used as a medium of
exchange along with other coins. In the beginning of
the 11th century, gold also started to get
used as a material to mint coins and the designs of
these gold coins were taken from the South Indian
coinage. The currency in Ceylon continued to circulate
in the form these copper, silver and gold coins until
in the 15th century when due to the
European initiation of voyages to discover new lands,
Portuguese landed in Ceylon for the first time.
The European natives got the
permission to construct their fort in Sri Lanka and in
few years’ time, they took control over the island.
The Portuguese used their own coins instead of the
local coins and from 1640; they started minting
“real” coins in Colombo. This scenario continued
for 9 years and after that, Goa in India was made the
minting center of Portuguese coins to be used in Sri
Lanka. Indian coins were also used as a medium of
exchange in Ceylon during this time. In the year 1658,
the Dutch displaced the Portuguese from Sri Lanka and
the island came under the control of Dutch East India
Company. The company marked the already existing coins
under its name and imported coins from Indonesia and
Netherlands. In 1660, Dutch East India Company began
minting copper coins and in 1784, silver rupees. The
official unit of account was changed to Dutch
rixdoller that circulated in Sri Lanka along with
Indian rupee. The island came under British control in
1828 who changed the official unit of currency to
British pound.
Rupee as the national currency unit of Ceylon was
introduced 1870 at par with the Indian rupee and
replaced the British currency unit @ 1 Sri Lankan
rupee = 2 shillings and 3 pence. The currency was a
decimalized one and “cent” served as the
subdivision breaking it into 100 equal cents. From the
year 1885, rupee banknotes started getting printed by
the currency board of the Government of Ceylon. The
Ceylonese rupee was linked to the Indian rupee all
that time and it got separated in 1941, although its
value was still equal to the Indian rupee. The island
gained its independence in 1948 and a couple of years
later in 1950, the currency board that issued the
currency was replaced by the Central Bank of Ceylon.
The country got its renaming done in 1972 and was
called Sri Lanka and thus the national currency that
was Ceylon rupee was also renamed as Sri Lankan rupee.
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| Factors
affecting the exchange rates between two countries
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The volatility in the foreign exchange rates
depends upon a numerous macro economic factors that
have different degrees of importance to different
economies of the world. Some special and exceptional
factors affecting the rates may also exist in the case
of different countries. Following are shown the common
factors on which the foreign exchange rate depends
- Flow of imports and exports between the
countries
- Flow of capital between the countries
- Relative
inflation rates
- Fluctuation limits on exchange rate
imposed by the governments of the countries
- Merchandise trade balance
- Rate of inflation in the country
- Flow of
funds between the countries for the payment of
stock and bond purchases
- Relative growth
- Short term
and long term interest rate differentials
- Cost of borrowings
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