Can LKR go back to being a stable currency?
Sri Lanka has had a financial history chequered with politically induced disasters as we are experiencing right now.
From the time of independence to the recent times, the Sri Lankan Rupee has gone from being a stable currency to one that has faced much devaluation, causing economic turmoil to the country and the people.
How did this happen?
Can we ever go back to being a stable currency of some value to the people and to the country?
The story of LKR started in 1872, when Ceylon Rupee replaced the Indian Rupee which had been made the then Ceylon’s standard coin in 1869. Prior to this, the British Pound had been the currency of the colony which came into effect in 1825.
Those were days when a few coins bought more than what we could envisage today. Combined with it was the fact that the needs of the people back then were not as varied and complex as today.
The Bank of Ceylon was the first bank to issue banknotes in 1844.
Throughout the history of the Sri Lankan Rupee, there has been a time when the currency was strong and performed well against stronger currencies.
While we know that the current depreciation of the currency is due to various wrong decisions and also indecisiveness of the authorities, we do know that there had been a time when the SL Rupee was indeed a strong currency.
What lessons can we learn from the current situation?
In a way, we are all to blame for the current crisis.
We have been buying well over what we can afford, especially spending foreign reserves on non-essential items. We have been prioritising non-essentials over essentials for years.
This problem didn’t start yesterday – it was on its way long before the pandemic hit.
There are some steps we can take to ensure that some form of stability is maintained.
Cut down on meeting wants instead of needs –
Too many of us are focused on meeting wants rather than needs.
Becoming prudent with the money to be spent is an old fashioned value but one that makes a lot of sense at this moment.
Postpone any large purchases until the situation stabilises –
Making large investments and investing in expensive purchases can be held back until the situation improves. This will give breathing space to manage everyday expenses.
Go back to saving –
People today are not used to saving.
Back in the day, if we wanted something, we were in the habit of saving for it.
Today, people want instant gratification – see it, like it , buy it – often on credit cards.
Don’t get into debt by meeting wants on credit – using money you really don’t have.
Get into the habit of saving some money however little. This can be towards buying things or celebrating an occasion.
Cut down costs –
There are many ways in which we can cut down costs if we look closely.
Even a simple exercise such as reusing something can cut down a one time usage cost.
Be conscious of small costs – they all add up.
Combine all travel needs at once – do all the cooking if possible in one go.
If we want SL Rupee to grow stronger again, while the monetary measures are undertaken by authorities, we too can play a role in contributing towards it.