Rupee appreciation drives Ceylon Tea prices down

COLOMBO: Sri Lanka’s Ceylon tea prices fell 100 to 200 rupees at an auction on March 08 due to rupee strengthening steeply, amidst good demand, brokers said.

Prices of all High, Medium and Low Growns saw fell this week.

Falling tea prices, which are accompanied by falling, wheat, sugar and food prices will reduce the demand for higher wages from workers, though it may reduce profits.

Tea firms have not yet hiked wages after the central printed money, depreciated to rupee and pushed up food prices.

When currencies fall, the prices of all traded goods inflate, not just imports.

Total auction volume was 5.2 million kilograms and there was good general demand, Ceylon Tea brokers said in a report.

The weekly sale average fell from 1471.03 rupees to 1267.07 rupees from a week ago, according to data.

“At the commencement of the sale, large volumes of tea were unsold with bids realised being significantly below the percentage appreciation of the Sri Lankan Rupee,” Forbes and Walker said.

“As the sale progressed some degree of stability was reached although rupee prices, on average, recorded a decline of 200-300 rupees per kg and on the higher selling grades, perhaps up to 300-400 rupees per kg vis-à-vis the previous week’s levels,

“The total unsold volumes would perhaps be in the region of approximately 15-20 percent”.