Any depreciation in the Sri Lankan currency would not be of much help to the country's garment exporters, as it would lead to a corresponding rise in the costs of imported materials, the Export Development Board (EDB) has said.
For several years, Sri Lankan garment exporters have been urging for a weaker currency so they can compete with other Asian countries known for low-priced apparels.
In the past month, there has been a change in the approach of Sri Lanka's central bank, which has led to a 14 percent decline in the value of SL rupee.
Last year, Sri Lanka's exports rose by 22 percent year-on-year, mainly pushed by garment and tea exports. This year too, the country is expecting a similar rise in exports and has set a target of over US$ 13 billion.
However, current year's export target has become more challenging due to the impact of rupee devaluation, said EDB Chairman Janaka Ratnayake.
Mr. Ratnayake said exporters feel currency depreciation directly impacts export revenue in a positive manner. But the fact is that most of the garment exports are based on imports, whose costs will increase and hence profit margins will come down, he added.
Sri Lanka's industrial sector is mainly led by garments, which depends on imports for raw material and machinery.
Fibre2fashion News Desk - India
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