We won’t tolerate speculation further; if necessary will use all instruments to discipline

Jun 13, 2018 (LBO) – Sri Lanka’s Central Bank Governor warned forex market players saying that if necessary he is ready to use all the instruments they have to discipline the market and the Central Bank is not going to impose an undue burden on the people.

Speaking at a recent event, Governor Indrajit Coomaraswamy said he will not tolerate the speculation further and putting an undue pressure on the currency.

“If anybody is speculating, I must tell you that’s not something that we will not tolerate for any length of time and it is not really helpful in the long run,” Coomaraswamy said.

“Lightened self interest of those who operate in the forex market should know that we have a lot of instruments we can use to restrict banks, importers and exporters.”

Coomaraswamy advised those to look at what former Governor A S Jayawardhana who passed away recently did in 2001 when the currency over shot.

“Look at the powerful instruments we have to restrict the market, we do not want to do it, let me repeat that, we do not want to do it, it’s not good for the market, importers, exporters and not good for the economy,”

“I say that because there is a very high import component in the basic consumption bundle in this country. So, there is no reason for this kind of pressure, we will if necessary use all the instruments we have to discipline the market.”

Coomaraswamy said the Central Bank indeed wants to develop the foreign exchange market and will be announcing further measures soon.

“We want to give the market, a competitive exchange rate we do not want to intervene in the market; we want people to behave responsibly and to run the market in a responsible way.”

Related: Central Bank to create intervention rules for foreign exchange market