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“Damocles”, an early warning indicator of emerging market exchange rate crises formulated by Nomura Holdings, Japan’s top brokerage and investment bank. According to the index, Sri Lanka has been warned about a possible currency crisis for the last few years.
Damocles’s score above 100, indicates they are at risk of an exchange rate crisis in the next 12 months. The sum of the scores generated on all 32 by the model had increased sharply to 2,234 from 1,744 since May.