Sri Lanka Tweaks Trade Rules to Ramp Up Forex Reserves

Sri Lankan central bank’s moves include mandatory currency conversion for exporters of goods and services to change their foreign exchange earnings into Sri Lankan rupees

 

Sri Lanka’s Central Bank tightened trade restrictions on Saturday, ordering exporters to repatriate foreign exchange earnings within 180 days of transactions in a bid to improve country’s depleting foreign exchange reserves.

Sri Lanka is tackling its worst financial crisis in over a decade, struggling to pay for critical imports including fuel, food and medicines and with just $2.31 billion of reserves.

The bank’s moves include mandatory currency conversion for exporters of goods and services to change their foreign exchange earnings into Sri Lankan rupees.

“All licensed banks are required to strictly monitor receipts of goods to Sri Lanka,” the central bank stated in a notification, adding that it “has the right to initiate action against non-compliance by any exporter or licensed banks”.

The state-run oil company on Friday increased prices by 55 to 95 rupees (22-24 cents) per litre for most fuels to offset losses after Sri Lanka introduced a flexible exchange rate that saw the rupee plunge 30% to 260 rupees to the dollar.

 

  • Reuters with additional editing by Sean OMeara

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Sean OMeara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.