Sri Lanka fears possible economic impact of U.S. rate hike

The Sri Lankan rupee was bound to depreciate further next year because of the decision by the United States to increase its interest rate, an official said on Thursday.

Minister of Megapolis and Western Region Development Patali Champika Ranawaka, who was addressing a function in Colombo, said the U.S. Federal Reserve increased its interest rates in the similar fashion in December last year, and as result 2,400 million U.S. dollars invested here was withdrawn.

He said the interest rate had been increased again, and it would have pressure 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 it too could strain the economy of Sri Lanka in the future.

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