BY EDWARD THEOPHILUS

The currency devaluation by developed countries (Especially France) had been an epidemic since the early 1900s until the establishment of the International Monetary Fund, and many western economies looked at this issue with a bias toward hard currencies of America and European counterparts. Fifty Economics classics edited by Tom Butler-Bowdon (2017) has noted the following point about John Maynard Keynes After world war two, Keynes played an important role in establishing the Bretton woods system, a flexible regime that would stop the epidemic of currency devaluations which had caused so much animosity before the war.   Keynes also helped establish International Monetary Fund and the World Bank” (Page 137).

The epidemic of currency depreciation than devaluation in many countries has been converted to a vicious pandemic since the Covid 19, and this situation is not a devaluation-related issue, but it is an automated process by an autonomous mode of the market economic system. The American dollar appears to be gone out of its superiority during the COVID-19 pandemic period which experiences a negative impact on international trade and financial movements. The unseen aspect of this problem is America determines the price of products against the wishes of producing countries, it seems that lower prices for imports from developing countries.  Whether America consumes such products and services or not it is not an issue, but it can control the prices of developing countries, and such authority always would not work in connection with friendly countries of America in Europe. America and European countries advise developing countries not to restrict imports, e.g., Germany advised Sri Lanka not to stop the import of vehicles.

The epidemic of foreign value depreciation of currency units of developing countries resulted from the depreciation of the American dollar, many times in history, abundant monetary units of developing countries had a direct link to the American dollar, however, when the value of the American dollar increases, the product and service prices of developing countries would not increase in line with the change of the American dollar, and developing countries have bloated the crisis and relegated poor people of such countries to obscurities. The nature of the comportment of the American dollar seems to be identical to the situation had in the early 1970s by gold prices, the oil crisis, and the Vietnam war. Now, no one talks about Euro Dollars and Peto Dollars.

The view of Keynes, a flexible regime of International Finance Management or the Briton Wood system has a disproportionate impact on the currency values of Asian developing countries, especially, in the Indian region and the Southeast countries of Asia. The situation displays that it requires a quick regime change in international financial management to protect developing countries in the Indian region. The Chinese region also needs to associate with the Indian region and the animosity between China and India should be consigned to oblivion with effective negotiations between two countries on account of people in the region, who are suffering lots from the pandemic of currency depreciation, no doubt that the current regime of the IMF pushes poor people to never-ending economic and social difficulties.

It is difficult to observe that Indian people and Chinese people except foreign policymakers have animosity or radical differences either in economic activities and cultural countenance, and religious practices.  Attitudes of Indians and Chinese are analogs concerning many aspects of life, but the animosity has been created by politics against the common wishes of people, and international media is setting fires and putting strows to the small fire creating a massive fire. Indian and China political and economic policymakers have never introduced symbolic policy measures to display the unity of people in both countries.

Recently, Mr. Ajith Nivard Cabral, the State Minister of Finance in Sri Lanka talked about Geo-Economics instead of Geo-Politics as he wanted to strengthen economic cooperation in the Indian region, and South and South-East Asian countries need to take firm policy actions to get out of the issue of currency depreciation pandemic. This issue is less debated by people and economic experts in both regions as the understanding of international finance-related issues of people are little, and many economists and politicians in the region have an interest in political, social, cultural, and ethnic issues that quickly attract people despite finance management regime related issues, and many people in both regions, Indian and Southeast Asian have no clear understanding of how currency depreciation harms on the day-to-day life. It is a complicated macroeconomic issue that feels people when they go to the marketplace. 

The manner of people in this region is highly concerned with social, cultural, and ethnic issues, and economic difficulties of people in Indian and the South East Asian region (Total population in the region is more than half of the world) are willing to stripe as a result of metempsychosis. Mr. Ajith Nivard Cabral pointed to Geo-Economics focusing on trade and economic relations and no doubt that trade and economic relationships are concerned with the depreciation of currency value. It can make statistical analysis and could find the positive co-relationship with the pandemic of currency depreciation, and regression analysis may find the factors related to the slope of regression with quantitative values, however, direct negotiation, action planning, and developing a voice urging politicians in the region would be a successful effort that will open the eyes of the Breton Woods regime relating secular depreciation of foreign and local values of currency units  Originally, the Central Bank of Sri Lanka had these objectives, later these objectives reflected a failure or it changed, people have no idea.

Generally, the foreign value of a currency subject to variation of the volume of foreign reserves and the export power or the volume of the positive trade balance. It seems that Sri Lanka’s policy action is to find a solution for these two areas by borrowing than productive actions to enhance foreign reserves and export revenue than import costs.  Mr. Ajith Nivard Cabral was appointed to the position by the president to make effective policies, however, he has gone beyond the role to make political talks.

When Sri Lanka’s monetary unit commenced quick depreciation with the COVID 19 pandemic I published an article in Lankaweb on 11.04.2020 expressing that the SARC region needs to take collective policy action to prevent currency unit depreciation.  The International Monetary Fund and other international financial institutions such as the World Bank, Asian Development Bank, and others, focused policy actions mainly based on providing small financial supports and the policy action them was no other than relegating to the indebtedness of developing countries, and it needed more than supporting for them to get away from the issue.  The regime change of international financial management was not the IMF’s action plan, and it needs to continue its regime showing that it has been taken action to help those countries. The regime of the IMF needs to look at the issue with a more humanistic approach considering people in developed and developing countries are humans with similar values.   

Think about the Euro Zone that commenced in the early in the late 1960s as the European Economic Commission, and originally, the UK was not interested in the union, but in 1972, the UK entered the EURO union disregarding the Interest of Australia and New Zealand on the economic relationships with the UK. The UK fully Brexited in 2020 from the EU. The Geo-politics of EU built a strong union and a common currency called EURO that issued in the year 2000 and secured the local and foreign value of the currency unit, and the Geopolitics of the European region was able to create its currency unit with dignity despite the expectations and objectives of the Briton Wood regime, in the year 2000,  stabilize the foreign value of the countries of the European region. The wonderful aspect of the European region was they have positively responded at currency value of EURO, even after the Brexit, the currency value of the Euro region maintains as expected by the union, and they have no firmed idea to regime change of within currency management in the region.