Sri Lanka central bank to swap rupees for dollars

Feb 02, 2008 (LBO) – Sri Lanka’s Central Bank is negotiating with friendly central banks to swap rupees for dollars, to boost the country’s flagging foreign reserves and meet unforeseen outflows, officials said. Central Bank Governor Nivard Cabraal said the first such swap deal is likely to be concluded ‘soon’ but declined to give a date or a value.

Deputy Governor W A Wijewardene told reporters that the foreign central banks would swap US dollars for Sri Lanka rupees.

In the most widely used central bank swaps in recent months, two central banks swapped their own currencies, not third party currencies. Most of the deals were concluded with the Federal Reserves

However Governor Cabraal has said earlier the Fed was not among the central banks Sri Lanka was negotiating with.

Sri Lanka’s foreign reserves fell to 2.0 billion dollars in November from 3.4 billion dollars in September following a dollar peg defence campaign by the monetary authority.