Sri Lanka is moving up the ranks in this week’s inflation table, economics expert Steve H. Hanke from the Johns Hopkins University in Baltimore, Maryland said today.
Hanke pointed out that Sri Lanka’s inflation was measured at a sky-high 55%/yr on Thursday, 24th March 2022.
The top economist reiterated that to crush inflation and save the Rupee, Sri Lanka needs to install a Currency Board.
Steve Hanke said a Currency Board like the one Sri Lanka had from 1884 until 1950 is crucial at this juncture.
“To crush inflation & save the rupee, Sri Lanka needs to install a #CurrencyBoard, like the one it had from 1884 until 1950. It worked like a charm,” he Tweeted.
Last week, Steve Hanke reported that Sri Lanka’s inflation has been measured at a roaring 49%/yr, adding that since 1st January 2022, the Sri Lankan rupee has depreciated 26% against the US Dollar.
The economics expert further said Sri Lanka’s severe balance of payments crisis and recent fuel price hikes are sinking the Rupee.
Hanke suggested that the only way to save Sri Lanka’s economy is to dump the rupee and install a Currency Board.
A currency board is an extreme form of a pegged exchange rate. Management of the exchange rate and the money supply is taken away from the nation’s central bank if it has one.
In addition to a fixed exchange rate, a currency board is also generally required to maintain reserves of the underlying foreign currency.
For more details on a Currency Board:
https://www.investopedia.com/terms/c/currency_board.asp
(NewsWire)