charindra chandrasena 00:05 Hi Riyadh. Hi Chari. You're you're in this seat today. Speaker 1 00:09 Yes, yes, yes. Because charindra chandrasena 00:10 Dana is unavailable, not available. Yeah. But we have our old friend Ravi. Speaker 1 00:17 Ravi is here. Speaker 2 00:18 Hello. charindra chandrasena 00:18 So this is the second time you're joining, and and second time, but definitely not the last time because you'll be coming in the future as well. Thank you. But today, well, I mean, we are we are recording this on the day that the central bank took an important monetary policy decision. The overnight policy rate has been raised by 100 basis points. So, in the market, I think the expectation was for something between 50 to 100 basis points, and the central bank has gone to the to the end of it, Really, and just to set the context, so the central bank's logic behind this, the rationale, of course, more will be revealed in the press conference. But the the rationale behind this is to to curtail demand, to restrict the the the money supply because of what we have seen over the past few days but just from I mean as initial thoughts what do you make of this who wants to go first Robbie you can start Speaker 3 01:34 no I think that's the that's the right move that they have done so Yeah, one percentage increase. It's a good thing. It sends the right signal, and they can see how how the credit demand whether it persists, and then maybe perhaps at the next run they can look at raising it further if necessary. charindra chandrasena 01:58 Yeah, Speaker 3 01:59 yeah. Yeah, charindra chandrasena 02:00 and Speaker 1 02:01 the thing is that so today we just we just checked the the the rates, so currently now it was how much it was three buying at 326 is Speaker 3 02:12 it? This was 328 Speaker 1 02:14 banks are buying at so the banks Speaker 3 02:16 one bank was porting at 320 porting 328. I saw the published rate on the Bank of Siron website was 353 25. The informal market they were buying at 320 and setting at 326. Yeah, one one person we spoke to. So yeah, I think they're still trying to maybe find find its level, but but so so some activity below that 350s and thing I think yeah Speaker 1 02:50 yeah so thing is the market would probably settle because now the signals have come out so we would probably see a further reduction also because then what happens is in the future in today there'll be quite a bit of mopping up that will be done, and also charindra chandrasena 03:05 the there's 700 million coming. There's seven last two transfers of the exactly yeah. Speaker 1 03:11 So the thing is that also when you come, basically the market would stabilise, but the thing is it was a lot. There was a lot of panic and you know panic buying and you know things like that. So I think the market would settle, and that's what you want. I mean, if you look at the economy, what people want mostly is they want the what you call the the volatility of a market. Nobody wants wants to see volatility. So suddenly, because if you look at the press releases that were done, or the news items that came out, it said Asia's worst performing currency, and suddenly two weeks later, Asia's best performing currency. So not even two weeks; it was more like count five days. Yeah, yeah. So the thing is that shows the beta, the volatility of the market. Market volatility is one of the worst things for investor because it sends all the wrong signals, and for example, if you look at the importers and the exporters, right? For the exporters, very difficult to set a rate, right? Importers very difficult to set a rate. So, and then what happens is the local domestic market, right? Goods and especially goods, you will see huge fluctuation in these things, and you will see certain retailers and all that putting the prices up. Sometimes they do it precautionary because they have no choice. So there are issues like that that comes with this. So I think what the what the what the authorities, including especially the central bank, has to ensure that that the volatility in the market is not there because volatility is not going to help anyone. Yeah, right. Yeah. So now, when we talk about volatility, the central bank would now say that the volatility was the case a few days ago, and that now. charindra chandrasena 05:00 They are stabilising it, and therefore, once the reduction settles at a at a at a certain level, then the volatility is over. In terms of the currency and and the broader picture, also one one thing they have also tried to do is to curtail demand Through, especially a couple of weeks ago, we had the surcharge imposed on vehicle imports, and just on Sunday they lowered the loan to value ratio by 10 plus by 10% Yes. Yeah. For vehicle. So, and also gold black, gold backed loans. Now, all of this is is is aimed at you know containing demand, reducing etc. Yeah, outflows. Are they on the right track with this, you guys think? Speaker 1 06:02 So there are two thoughts. One, there's a thought where people say that you know you need to curtail imports, right? Especially vehicles, and vehicles are the easiest one that they target. But you don't understand vehicles are one segment, right? There are other things that come, right? Right? There are so many things that are imported, right? So if you go back during the crisis, they bought imports. They bought what do you call import restrictions for almost everything. It keep down to down to imported like food items also. So that's why it ends, you know. So the thing is, you have to. That's one side of the story. The other side of the story is okay. If you look at customs, they said you know they record earnings. A huge contributing factor for that, and that which actually helped the primary for this primary surplus was actually vehicle import taxes on vehicle imports. Because if you look at the states, main income is taxes, and the most efficient tax or the most profitable tax for the government is motor vehicles, because the taxes are from 150% to 250% sometimes even up to 300% depending on the CC capacity and the and if it's a luxury vehicle, because there are certain certain features which are taxed as well. So if you look at that, if you are getting let's say a unit that is bought in for one unit, you are getting a return, and that unit is of a high value. You are getting a return of 151.5 times to 2.5 times to maybe even two 3x, right? So if you look at other categories like if you look at personal income, it's 36% So you're competing. You get it's 36% VAT is 18% Then financial VAT is 21% If you look at corporate tax, is 30% Right. So if you look at on those those categories, the most profitable for the government has been motor vehicles. Right. So and the number of motor vehicles that have come down has been large because we had the pent up demand. So, if you look at that level, then that contributed a lot to the primary surplus, right? So, then you will see the contributory factor to the primary surplus will definitely come down. That is one side of it. So the best option, the way we, I mean, at least I see it, is basically the the interest rate adjustment should have come because that that is those are the tools what the central bank has, which is from the open market operation, which they can, which they can do. So if the rates had gone up, then demand would come down, and if the person still feels he wants to take a lease and bring the vehicle down, that's up to him. That is one. So then the market equilibrium will also stay because you know interest rates have gone up, right? And lot of people actually who are thinking of getting a housing loan because now, for example, you are only looking at motor vehicles. You look at let's say something very basic like a housing loan. I would say 80% of the things that are so 75% or at least 70% of the cost is imported. It's all import imports because, for example, the local contribution is probably only sand and labour. The rest everything is bought in maybe a little bit of some tiles or some you know things like some bathroom, maybe tiles and certain bath, they are small items. Ah, maybe domestically you can source them, which are of inferior quality. But if you look at a person who is building a house, you want to most of the items are bought in. So if you look at those contributory factors, it is where it is, right? When look at the consumption side. So, my personal view is motor vehicles are the politically easiest easiest to sell because the reason is you see it with your eyes and they are going on the road and you see all these new vehicles going. So then they can you know it's it's motor vehicles are very political. Very easy to sell, but if you look at the complete compound. When you say charindra chandrasena 10:03 sell, you mean to restrict, is it? To Speaker 1 10:05 restrict means to sell it to the public. charindra chandrasena 10:07 To sell it to the public, Speaker 1 10:08 right? So that is something. Yeah, you mean charindra chandrasena 10:12 to sell the restriction to the public. Speaker 1 10:14 To sell the risk. I mean, yeah, to sell the restriction to the public. Yeah, because it's easy because motor vehicles are generally imported by a particular class of people who can afford it. charindra chandrasena 10:22 Yeah. Speaker 1 10:22 So if you look at the prices, you know, on the leasing, the leasing facilities and all that, most of the most of the people who are there, they simply can't afford. I mean, probably only maybe three to 4% of the population, or maybe even less, who who actually were able to import these vehicles, so there clearly is a problem there. So clearly, the problem is for the people to this thing. So when look at that side on the on the political angle of it, it's easy to say you know we don't need vehicles and all that. And the other side of it, to be a little bit fair to the government also, there are a lot of vehicles were imported, and yeah, so that's so this charindra chandrasena 11:01 pent up demand that was there from last year. I mean, sorry, from all the years before last year. Yeah, when it was opened last year, I think it exceeded expectations in terms of even no. So it's Speaker 1 11:15 extra. No, so the thing is, so there are three types of imports into Sri Lanka electric motor vehicles. One is the agent. Second is the parallel importers, right? These are the you know the guys you finding coho and all that. Then the third category is the people who import it personally for personal consumption. But most of the personal consumption. And what I heard recently from one of the importers, what they said about 60% of the imports are actually personal imports. So what happens is maybe you take a family father, the mother, and two children. They will import three vehicles under three names, and they will try to bring it and keep a margin and sell. So it becomes like a private thing. So that is another segment of the market that is there. Those are the ones you see ads on, you know, on Facebook Marketplace and all that things like that. So that is another complete segment that nobody generally talks about that much, right? Then you have the people, the parallel importers. The agents generally bring down; they bring a X stock, but they normally bring down on orders. That's how the agents work. So, for example, some of the popular electric cars and all that-that the agencies that are there. I spoke to someone who is there. Then I mean I know I spoke to someone who actually is involved in the process, and what they said is they mostly bring it on order because they get order they know right okay this month we have 10 okay next month we have so not I'm not saying exact number, but on let's say luxury segment super luxury segment let's say there's order for 10 or maybe 20 they know that is amount to bring down, they don't bring a huge quantity down, which the parallel importers did. So there is a bit of a discrepancy there. But the thing is, with the pen down demand on the mid sector vehicles, mid and the lower sector, the lot of vehicles came down, especially from Japan, because if you look at the agents and all that, they comes from China. Like if you look at the popular electric vehicles that are there, which are selling very, which are which are being very aggressively sold or aggressively purchased. They are bought from China mostly, right? So that's a completely different game. There's one in charindra chandrasena 13:08 particular that comes to mind. Yeah, yeah. Three letters. Yeah, yeah, exactly, Speaker 1 13:11 right. So that is something that you're currently you're you're looking at. But the scenario is if you look at the Japanese imports, there's definitely what you call there's definitely some excess stock that is already there. So that is something I that is something I think that you have to look into, right? Because this reco stock is there, and they are in a bit of hot pot also because every quarter they have to pay a 3% surcharge for not getting it registered. So that's a completely other another thing what they have to pay, and on top of that, that 10% that the 10% that they have reduced from the from the low from the what you call taking a loan or taking a lease. It used to be 5050 50% paid upfront, 50% you you can take a lease or a loan or something like that. So if you look at those two, it has come down to 40, which means again affordability. They are restricting restricting affordability. So if you look at all that, generally the more the market they are trying to contract demand. So looking at that, which charindra chandrasena 14:22 a lot of people would say is the right way to go, is lot of my point. Speaker 1 14:26 No, no. So that's the thing. So that is the domestic adjustments. What you're doing, no. But the the the the scenario. Yeah. So it's it's a it's a yeah. Speaker 3 14:38 Yes. So so yes, contracting demand is the is the is the key. But you see, you mustn't focus on the trade flows themselves. Now the trade flow results from something, right? Because people need money to spend, right? So and generally. You cannot spend beyond your level of income, right? You are restricted by so. If you are spending on one particular item, you mustn't. You are not able to spend on something else, right? So, so if you are borrowing from the bank, you are borrowing somebody else's savings. So then again, you are not out of balance, the the problem comes in if you are spending and someone else has not saved. If you are spending money that has been created through through the central bank, that is when you have this issue of being able to consume beyond your level of income. This is the bigger picture of how your trade imbalance, the overconsumption happens because people are able to borrow freely from the banks, and what the banks are lending is not others, the savings of others, but money that has been created. So that that is so the trade flow is only a result of something else. So when you focus on trying to restrict trade flows in whatever way, either by duties or by various by restricting the loans that you can grant, what will happen is the the demand the the because the demand is coming from the increase in the supply of money, that's why people have money to spend. Then they then they look for things to spend it on or or find users for that money. So obviously, I'm charindra chandrasena 16:33 going to look for subs. I mean, alternatives. Yes, because Speaker 3 16:36 I think Riyadh alluded to that. Now, if you recall the 2020 2022 crisis where. What we saw was that import restrictions kept increasing as the problem kept worsening. But if you look at the total imports, right, in 2021, when we were having power cuts, gas shortages, fuel queues, all of that, right? And if virtually everything banned, imports were at a three-year high. Just look at that data from 2019 to 21. We had already reached. So you, so how did this happen with so much of restriction? So there's an excellent quote that B. R. Chenoy gave. He was an Indian economist who was here. He wrote a programme. I think in the 1960s, right? The balance of payments difficulties cannot be solved by intensifying the regress, the regress of exchange control and import restrictions, nor by extending the schemes for expanding domestic production to substitute imported goods, the so-called measures for economising on foreign exchange, intensification of the rigorous exchange control and import restrictions may reduce the quantum of import goods flowing into the market, it cannot reduce the flow of money seeking to purchase goods either for consumption or investment. The this flow of money is determined by the national product and the inflationary part of the net cash operating deficit. So, so you, if the flow of money is available, it'll go. It'll drive it. It'll find somewhere to spend itself on. So, so while you have these restrictions on on loan to value ratio, it'll restrict credit in a particular sector. The the excess credit will then there'll be other people. The business of banks is to lend. So when they are when they have a surplus of funds, they don't want to keep it idle. They'll they'll be looking for borrowers to lend to. And there are there are all sorts of people who have various business needs, consumption needs, because even credit card debt contributes in various ways, so people borrow on yeah yeah, but so then charindra chandrasena 19:05 the the counter would be so now the central bank has raised the policy rate by 100 bps. Speaker 3 19:14 Yes, charindra chandrasena 19:15 but that also comes at a cost in the sense, I mean, how that can impact the bond market. There are there are other considerations that have to be taken into account when hiking rates. Also, no. Speaker 1 19:29 The thing is, Chari said this. What happens is when you don't have multi-stability, what happens is you get a lot of speculation, right? Speculation is bad because then people get panicky. They start forward booking. They start buying dollars and all that, and you create a currency crisis. So to curtail that, the best thinking is you need to mop the liquidity out, which currently only today they have decided to. Okay, they decided last night, but today only in operation it's going in because charindra chandrasena 19:56 they had a they had a monetary policy review meeting in late. March Speaker 1 20:00 yes charindra chandrasena 20:01 on the 25th or 26th of March they didn't change the which was almost one month after the Iran war started Speaker 1 20:06 correct charindra chandrasena 20:07 and they didn't they didn't exactly Speaker 1 20:09 so thing is that so the thing is money or people I mean the thing is you can't go against the market and we charindra chandrasena 20:16 but even at that time they are the sort of the the restrictive measures were being talked about. No, prices were going up. Of no, Speaker 1 20:27 yeah, correct. So the world and so exactly. So the thing is, you know, common sense has to prevail, right? So common sense is, if the biggest oil producing or exporting region in the world is at war, obviously you're going to have oil shortage, right? So if you are going to have oil shortage, obviously there is going to be a cost push, right, which is going to contribute. And if you don't adjust the price, what's going to happen is people are going to consume like life is normal. And then what's going to happen is you are going to spend a lot of money on a petroleum bill because supply is what you call sorry demand is demand is not curtailed. So if they had, if they had, so how do you curtail demand? One thing is you can put the rates up. Other way, other means you need to do a price adjustment which reflects the market. charindra chandrasena 21:09 But but my my point is this, guys. I'm trying to get to get at from the central bank side whether it's such a simple decision to raise rates because what you are doing is basically slowing down the economy. Yes. Now that also comes with its own cost. Yes. And then how it can impact the bond market. I mean, yeah. Yes. So Speaker 3 21:31 you see now, Riyadh hit on a very important thing earlier. What he said was, people hate this instability when you don't know where your where things are going, so the you see in a market economy, the thing that maintains the coordination between various sectors, the the critical thing is is the price system, right? Because prices are what coordinate because your nobody sees what you're producing for, right? To and in to control blood surpluses and shortages, it's the price mechanism that that is the essential coordinating factor, right? So when that goes wrong, you have all sorts of problems, which is why price trying to control prices is such a bad. It's probably the worst thing you can do, but the price of money, which is the rate of interest, right? That controls investment and and what you call intertemporal preferences, the amounts people are prepared to save, amounts people are prepared to invest, and how far they are prepared to postpone present consumption into the future. If you manipulate that interest rate, you you cause your investment. You have malinvestment. What happens is projects sometimes appear artificially cheap. Then you can have these you have these big booms in housing in in that then go wrong. You have other vital people, you know, think it's cheap and it's worthwhile. But then it's an artificial rate that you're holding. Eventually, that rate has to go up because because it starts creating the instability that eventually develops into some sort of crisis, and then the rates have to move up. Then your project is no longer viable, and then you are stuck with it. Then you can have risks to the bank. So the rule is, I think, if you try to manipulate prices, including the price of money, you will create instability that will lead to problems. So the last thing you want is instability. So so if you allow the price system to work naturally to a large extent, you will avoid this. Your it is interfering in that system that causes your problems. Because Speaker 1 24:01 because if the value of let's say if you take a unit of money if the value is going down you convert that into a physical product right I mean can be anything can be can be a vehicle can be land can be anything because end of the day you want to secure something that is tangible before it money depreciates further so so the market will react that way, and that is not something which that's what they say you can't you can't fight against the market and win. I mean, I mean, yeah, market charindra chandrasena 24:31 will win. Yeah, yeah. Speaker 1 24:32 I mean, if you check, you know, once I remember, I think the 19 when was it probably 1998 was it where the Bank of England Bank of England did something I can't exactly remember it. Bank of England did something completely out of the ordinary, and the pound got hammered, right? So because the reason is you can't you can't you can't fight against the market. So the reason being so because of that. So because of that, you have to make sure the value of the currency is maintained. And if you look at currently, if you look at any what you call monetary regulator, their primary function is there are two primary functions. One thing is keeping the value of the currency unit, right? So it's consistent. Second is you get market and they have different tools to do that, and the other one is the monetary stability or the financial system stability. So, so those two are the ones that you need to do. So, now for example, if you take the Sri Lankan the regulator, I mean, it's arguable that you know some of the. It's very questionable. Some of the things. I mean, people can argue that they haven't done Speaker 4 25:46 both Speaker 1 25:47 because the banking system also went through a bit of a you know bit of bit of a top situaway with what happened with particular banks, and then this you know within a very short time becomes the worst performing currency and becomes the best performer. Yeah, charindra chandrasena 26:02 but but then they would they might argue, Ravi, you can come in here, but they might argue that yes, so there was a shock and there was massive depreciation. Speaker 1 26:12 No, let me just think that because from if you take last year, they opened car imports in February last year, and until December they had imported $1.8 billion worth of cars, motor vehicles. Right, the currency didn't budge. It was at 303. It went up to three. I think I think in charindra chandrasena 26:36 the in the first first three months or so of this year, first three months or first four months, the the spending was 600 billion. Yes, Speaker 1 26:44 and there was a slight variance on the currency. But if you check at last year, I mean, people can go and check the numbers from 303. It just went up to about 304 in December. So this whole myth of currency and you know that you have a huge import bill is. I don't think there's no data to back it, right? But then again, but then again, the the there has been net inflow of liquidity into the market, which had an impact on the currency. That is, you know, because the central bank was aggressively buying, so there's no problem with them buying as long as they mop it up. Because when you buy, invariably you have to pay the commercial banks. You have to pay them in rupees, so that rupee liquidity is the one that creates the problem, right? So that rupee liquidity has to be has to be mopped up. So the only way you can mop that up is basically either you issue domestic debt into the market and you pull it in, or the other one is you have to put the rates up. Yeah. So yeah, sorry. Speaker 3 27:43 Let me just go back to something else. Also, I'll just connect up with what we had said just now. Also, the we why are we so interested in in why are people so concerned when the rupee starts to wobble? Right. It okay. We have spoke about investors. That's all fine. But to the ordinary man, the boomer, your currency depreciates. Your fuel bill goes up. Your gas bill goes up. Your electricity bill goes up. All your imported food items, which is a lot of them, from dal to dal to bread to a lot Speaker 1 28:21 of things. Speaker 3 28:22 It all goes up, so it has a big impact on people's household, right? And it's politically very costly because if you look, there's I was I'm about to quote a piece of research that shows that just right, the older one, but they done some research that by Political leaders often lose office in the year following devaluation, right? But Frankel updated the estimate and verified the statistical significance. A political leader in a developing country is almost twice as likely to lose office in the six months following a currency crash, charindra chandrasena 29:05 or otherwise, so that Speaker 1 29:08 actually happened here because in Yahoo, the Speaker 3 29:11 currency went from 160 to 180, and the and that was the East attacks were just the icing on the cake. They they were gone. If you recall, the the local government election in 2018 was that was lost after the currency fell. Correct. Right. So so which is why and Speaker 1 29:28 Gota and Gota be President Gota be has also same story. Currency got currency got yes. So so Speaker 3 29:34 it's very because it's important to people, right? So so you need to get that. Now the Deputy charindra chandrasena 29:40 Finance Minister, Minister Anil Jayant, recently said that it's not all doom and gloom when the currency depreciates, and I think the main point he was making was about exporters. You don't think that even the exporters benefits a Speaker 1 29:59 short. Yes, Speaker 3 30:01 because what happens is this: you get some imports Speaker 1 30:06 like labour and raw materials locally for a short period. They benefit, and after that, what happens is again the again because of the depreciation because the workers because because workers you know when it depreciates you know imports become more expensive and all that, right? So then they will ask for higher wages. Then the people who supply the material also their cost also, their input cost also goes up later on because fuel goes up and all that. And their labourers also, people who work for them also ask for higher wages. Then what happens is again it comes to the equilibrium. So it's a short term gain. The short term gain is a massive long term loss because you can't plan for anything because the input cost go up. So when the input cost goes up after a while, it's very difficult to set a pricing. Yeah, and Speaker 3 30:51 there are other. You see, you're assuming that okay, your Sri Lanka garment becomes a little bit cheaper in dollar terms for the U.S. buyer, so so they might switch to you, but then you have to see how would the Indian government suppliers or the Vietnamese or the Chinese react to that. So that is one aspect, right? Then you have to see whether do you have the capacity within your existing production side to increase your production without increasing your marginal cost, you know there are there are many other considerations that come into that. So so it's it's a very tricky and very incomplete picture. It's on the basis that that that common assumption in economics that everything else being equal, on on paper it would seem to be the minimum condition would would be if your import elasticity and export the combined import export elasticity is greater than one, would your currency depreciation help you? Now there's a study that I've I looked at, which had been done for Sri Lanka from 2000, measured it from between about 2000 2018. I think it was Chandra or somebody. I forget the don't have it with me. But what they found was that it's called the Marshall Learner condition for Sri Lanka. It's it's below one, so combined elasticity less than one, which suggests that currency depreciation will, in the short to medium term, actually worsen your your your position. So so it's a it's a complicated question, and and it's not something that is you know is un you can jump into yeah charindra chandrasena 32:45 the your point is that it can't be used as a strong argument against devaluation right yes and and you also for devaluation Speaker 3 32:56 yeah now if you look what Riyadh I had to correct Riyadh a little bit because the currency in November? I did some writing on this recently, which is why it was familiar. It was 290 in November 2024. Yeah, it had fallen to 3.9 by December 2025, which is about 6% or something. And then it was rounded when. was Speaker 1 33:21 three or five, three or four or five. It is about nine, I think, Speaker 3 33:26 but it was 290 November in 2024. Now you see the what had if you look at the last two or three years, right? Your your value of your currency depends on the on your stock of money, right? So under the IMF programme, the central bank was required to sell down its holdings of treasury bills, which it did so from from some time in 2023, right? So the dollar, the rupee, which was 360 to the dollar started to fall as the stock because when the central bank sells treasury bills to the commercial banks, they pay in rupees. So that amount of rupees is taken out of the monetary base and gets locked up in the in the central bank. So your money supply is contracting. So as the bill stock was sold down. It went from 360 to 280. That was, I think, the bottom, right? Then somewhere in 2024, through open market operations, they started re-injecting money into the commercial banks, which they did for about six months. Then once again, you saw the rupee starting to move upwards, it was it was 290 in about 2024 November 2025. They stopped open market operations, but continued to buy foreign exchange and engage in foreign exchange swaps with with banks, where they were basically borrowing the foreign exchange and giving newly created. Now these rupees were what is what was showing you credit demand, and then you saw the rupees sliding slowly as the money stock increased. From it went up to about three, three not nine or something. But but what happened is because the market doesn't have a, or the market participants don't really have a very clear idea of what to expect, and and when you say the rupees market determined, you know it's a question. What do you mean by that? Where does it go? So so when you have this thing open question hanging in the app, and you have this war breaking out on february 28. Then everybody starts to panic. So that's the time when it shot up to about 319. Then it was bubbling around there, but then without clear direction coming, it starts. It starts to you know informally moved up to 327 or whatever, then came back in that three. It was in that low 320. Then the moment that restriction on the duties were increased, that caused a loss of confidence. So then that's when all panic broke loose. So you need to. So the central banks should have a foreign exchange policy as well. If the IMF says you need to have a floating exchange rate, you need to have an informal dialogue with the bank traders. This is the price. You you have a get out clause saying intervene to prevent excess volatility, you define what that clause is. Today's price is 325. You tell them informally if it falls to 324, we will we will buy. If it goes to 326, we will sell. One or two days you do that, the market will remain stable. All you need to do is to give a clear guidance. So, I would suggest defining what access volatility means in very narrow terms. And once it's communicated, the market is safe because they know they lose out if it goes high or low. So, so then it'll just fall into place. Yeah, Speaker 1 37:21 and the other things are is like when you have a let's say like a volatile. I won't say volatile. Let's say a weak system. Weak means not a okay. I think weak is also not the right word. Let's say little bit loose system. What happens is when an external shock comes, the shock gets compounded heavily. There's huge compounding that goes through. Now, for example, the Middle East is that's the thing. So when you get into a bit of a you know when you get into a bit of a tight spot, let's say in the local system, when you have something like the Middle East or COVID or something that comes, which has a external impact on your economy, what happens? It starts compounding the problem. So that's not that's another reason that that that happened, right? That the compounding effect definitely comes. Yeah, because you're vulnerable. Speaker 5 38:05 Yeah, you're vulnerable. Speaker 1 38:07 Yeah, you are in a vulnerable position. charindra chandrasena 38:08 Yeah. Speaker 1 38:08 So and your if there's a weakness in the system, it gets exposed very fast. So that is another thing I think when they when when the policy guys and all that like this thing that you need to take account for. Yeah. charindra chandrasena 38:19 Right. All right. Unless you have something right now. Yes, I Speaker 3 38:23 think thank you very much for having me. So I think in a difficult environment, the lesson we must learn is that we must be cautious and prudence and try to live within our means and not try to be be conservative in our policy, and then I think that's the safest when when times are difficult. Be adventurous when times are good. charindra chandrasena 38:49 Yes. Yeah. So then I think we can wind up. But but very interesting discussion on focus on the currency also. Speaker 1 38:59 Riyad, will you usher us out? So all this free content is possible because we have the insider programme, and you get views and you get some certain information that is not openly available or that comes at a with a lag. You get the programme, you get that you get that view insider view on the on the insider programme. So please come and subscribe for it. And your subscription basically helps us do what we are doing now. Right, right, charindra chandrasena 39:28 all right. Thank you, gentlemen. We will see you again next week if you win, Jeff. Yeah, probably. I Speaker 6 39:36 hope. Yeah, probably I might. Speaker 1 39:38 Yeah, probably I have a small programme at programme, so I might, I most probably I won't be there. But the audiences need to know charindra chandrasena 39:47 your programme. Where are you going? Yeah, we'll we'll wind up with that. Thanks, Avi, for coming as always. Pleasure having you. Thank you. Thank you. Sorry, sorry. We Speaker 3 39:58 are still rolling. No. So Riyadh, thank charindra chandrasena 40:03 you as always. Our constant fixture. We'll miss you next week, but hope to have you the week after. Speaker 1 40:09 All right, cheers me. Thanks, bye. charindra chandrasena 40:11 And thank you for tuning in and keep watching. Let us know what you think about this show and all the other shows as well. And we hope you tune in next week as well. Transcribed by https://otter.ai