Markets

Sri Lanka central bank foreign assets negative by US$780MN in Sept

The Central Bank of Sri Lanka on Monday said the ongoing scarcity of the US dollar highlighted the need for the island nation to strengthen its foreign exchange reserves, as it defended its recent decision of asking exporters to convert their foreign earnings to rupees regularly at an expedited time-frame.

In an extraordinary gazette dated October 28, the Central Bank’s Monetary Board issued new rules according to which exporters of goods and services must convert the residual proceeds of foreign currency into Sri Lankan Rupees on or before the seventh day of the succeeding month.

The central bank has defended its decision pointing out that several other nations have used this scheme. However, critics argue this could lead to an ”over-regulation” of the foreign exchange sector affecting billions of dollars in remittances from migrant workers.

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