Tuesday February 28, 2023 4:49 pm
ECONOMYNEXT – Sri Lanka’s spot market has become active after the central bank reduced a surrender requirement leaving more dollars to be used in the banking system and a trading band was also widened.
The rupee opened around 360/365 to the US dollar and business was done around 356 in intra-day trading, dealers said.
The spot US dollar closed still wide around 350/357 to the dollar.
On Monday several banks sold excess dollars to the central bank at a little higher levels, dealer said.
Sri Lanka’s rupee collapsed in March 2023 and the float failed due to a surrender rule where banks were asked to sell 50 percent of their export receipts and the central bank creating new money.
A float involves suspending all convertibility. A surrender rule is a ‘strong side’ convertibility undertaking which weakens a peg.
Sri Lanka’s spot market died almost two years ago as the central bank printed large volume of money to mis-target rates and create unsustainable outflows.
However from April 2022 rates were hiked and money printing was gradually stopped. Since then a peg or around 360/370 to the US dollar was maintained with the surrender rule preventing the currency from appreciating despite private credit becoming negative. (Colombo/Feb29/2023)
- https://economynext.com/sri-lanka-s...loses-stronger-at-rs350-357-to-dollar-113520/
HNB අද. ඊයේ තිබ්බේ buying 359.50
