CB eases pressure on exchange rate

Ramani KANGARAARACHCHI

The Central Bank of Sri Lanka (CB) has allowed greater flexibility on the exchange rate and adopted a number of prudential measures to ease the pressure on the exchange rate to depreciate.

All licensed commercial banks have been directed not to effect any pre payments of import bills, said Director, Institute of Policy Studies of Sri Lanka Dr. Saman Kelegama.

He was speaking on the Global Financial Crisis and the Impact on the Sri Lankan Economy at a seminar organized by the CMA in Colombo recently.

He said that the CB has instructed licensed commercial banks to obtain a 100 per cent margin of the import value of any letters of credit opened for 44 categories of imported items and to increase the margin deposit requirement for the importation of vehicles from 100 per cent to 200 per cent.

Authorised dealers too have been instructed that forward contracts for the purchase of foreign exchange should not only be for a period of up to 180 days but also only for the purpose of payments and receipts in foreign exchange in respect of trade in goods and services. Any cancellation of a forward foreign exchange contract by the customer should be subject to a penalty at least to fully compensate the loss arising therefrom to the authorised dealer.