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Sri Lanka tightens trade rules to boost currency reserves

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Economy1 hour ago (Mar 12, 2022 04:35AM ET)

Sri Lanka tightens trade rules to boost currency reserves © Reuters. FILE PHOTO: People walk past the main entrance of the Sri Lanka’s Central Bank in Colombo, Sri Lanka March 24, 2017. REUTERS/Dinuka Liyanawatte/File Photo

By Uditha Jayasinghe

COLOMBO (Reuters) – 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.

($1 = 250.0000 Sri Lankan rupees)

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