Finance Minister warns exporters not to hoard their proceeds abroad

Finance Minister Dr. Sarath Amunugama sent out a strong warning to exporters asking them to repatriate their proceeds and help ease the pressure on the rupee. Finance Minister Dr. Sarath Amunugama sent out a strong warning to exporters asking them to repatriate their proceeds and help ease the pressure on the rupee. The Sri Lankan rupee has fallen by about five-percent against the US dollar todate, forcing the Central Bank to step in to prop up the currency.

Exporters’ who are currently keeping their proceeds abroad, are hoping the rupee will depreciate further against the US dollar.

In the past, the government got around this problem by making it mandatory for exporters’ to declare their monies during a specific time period.

“The Central Bank was in the market last week buying some US dollars, which helped push the rupee down somewhat,” Amunugama told journalists on Wednesday.

Traders said the bank picked up dollars at around the 102.30-102.50 level last week, putting mild breaks on a sliding rupee, adding liquidity to the money markets and preventing a hike in overnight interest rates.

If the situation persists, Amunugama says the government may be forced to re-think its decision and force exporters to repatriate funds within a stipulated time frame.

“We have been depending on the goodwill and good sense of our exporters. But if this persists we will have to re-think whether we are going to introduce this,” he warned.

For the moment, the heat is off errant exporters.

“At the present moment we have not decided to introduce it, but if our exporters persist in keeping their foreign exchange earnings abroad we have to look at that,” he added.

The rupee traded at 103.66 against the dollar on Wednesday compared with Tuesday’s close of 103.48.

-LBO Newsdesk: LBOEmail@vanguardlanka.com