Convert export proceeds to LKR, urges CBSL

COLOMBO (News 1st); The Central Bank has urged the export community to repatriate its export proceeds to Sri Lanka and convert their proceeds to local currency to help address the current foreign currency liquidity crisis in the country.

According to the Central, foreign currency deposit balances with the banking sector increased by 1.9 Billion US Dollars, during the period between January 2020 and July 2019, due to speculation on exchange rate movements.

It adds that with low rupee interest rates, some exporters have found it more lucrative to borrow and import to meet their input requirements, leading to further tension in the domestic market.

Sri Lanka’s exports reached US Dollars 6.8 Billion during the first seven months of this year, a 23.7% increase compared to the corresponding period last year, while inflows from remittances grew 2.6% to 3.8 Billion during the first seven months of 2021, from 3.7 Billion a year ago.

The Central Bank points out that if there had been a 100 percent repatriation and 100 percent conversion of export proceeds into the domestic market the trade deficit could have been easily financed using other forex inflows into the country.

The Central Bank stressed that it would be reasonable for the Government and the Central Bank to take steps to ensure the complete repatriation of export proceeds within a reasonable period and the conversion of export proceeds into LKR, including the proceeds already accumulated in exporters’ accounts so that the true purpose of exports is realized.