Sri Lanka warns money exchanges from selling foreign currencies at higher than official rates

Sri Lanka's central bank has warned the money exchanges that sell foreign currencies at higher exchange rates that their licenses would be suspended or revoked if they go beyond the exchange rates stipulated to them by licensed banks, local media reported Tuesday.

In a statement released to local media, the Central Bank of Sri Lanka asked the public to inform the Department of Foreign Exchange of any instances that a money changer offers higher exchange rates for any transaction.

The Sri Lankan Rupee (SLR) hit the 298.99 mark against the US dollar on Monday. However, several money exchangers in the country were recorded to be selling the U.S. dollar at a higher rate, leading to increasing public complaints.

Sri Lanka's currency has been devalued by almost SLR 90 against the US dollar since March 8, as the country's central bank attempts to stabilise the economy.

Sri Lanka's economy has been in a free fall since the COVID-19 pandemic due to the crash of the tourism sector.

Sri Lanka is presently facing a foreign exchange shortage which has led to a fuel, power and gas shortage and has sought the assistance of friendly countries for economic assistance.

India provided more than USD 500 million in foreign currency swaps to strengthen Sri Lanka's foreign reserves, taking the total up to USD 900 million. India also extended the repayment time frame for the USD 500 million debt of Sri Lanka under the Asian Clearance Arbitration.

More recently on March 17, Sri Lanka signed a USD 1 billion credit line deal with India for the procurement of food, medicines and other essential items during Sri Lankan Finance Minister Basil Rajapaksha's two-day visit to India.

The International Monetary Fund (IMF) on Friday recommended a number of measures, including tax hikes for macroeconomic stability in Sri Lanka and also to mitigate adverse impacts on the vulnerable and the poor.

The report recommended implementing a credible and coherent strategy to restore macroeconomic stability and debt sustainability while protecting vulnerable groups and reducing poverty through strengthened, well-targeted social safety nets.

Sri Lanka's Finance Minister Basil Rajapakse is scheduled to travel to Washington in April in order to seek IMF assistance to deal with the country's economic crisis.

( With inputs from ANI )

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