Sri Lanka fears possible economic impact of US rate hike

Colombo, Dec 15 (IANS) The Sri Lankan rupee was bound to depreciate further next year because of the decision by the US to increase its interest rate, an official said here on Thursday.

Patali Champika Ranawaka, Minister of Megapolis and Western Region Development, said the US Federal Reserve increased its interest rates in a similar fashion in December last year — and as a result $2,400 million invested here was withdrawn, Xinhua reported.

He said the interest rate had been increased again, and it would have impact on the rupee value.

“We are heading for a period with economic difficulties as a result. We should act with caution,” he said.

Also, he said the crude oil prices were rising, and this, too, could strain the Sri Lankan economy in the future.

The US Fed approved the first interest rate hike in a year on Wednesday and said it foresees three more increases next year.