Central Bank introduces urgent measures to ease pressure on exchange rate

Mar 19, 2020 (LBO) – Sri Lanka’s Central Bank has introduced several measures to ease the pressure on the exchange rate and prevent financial market panic due to the COVID-19 pandemic.

Accordingly, licensed commercial banks and National Savings Bank are directed to adopt the following measures during the next three months, with immediate effect:

  1. Suspend facilitating importation of all types motor vehicles, other than those excluded specifically under Banking Act Directions No.01 of 2020, under Letters of Credit
  2. Suspend facilitating importation of non-essential goods specified in Banking Act Directions No.01 of 2020, under Letters of Credit, Documents Against Acceptance and Advance Payment
  3. Suspend the purchase of Sri Lanka International Sovereign Bonds by licensed banks in Sri Lanka

In addition, Authorised Dealers of foreign exchange are only allowed to issue foreign currency notes as travel allowance up to a maximum of USD 5,000 (or its equivalent in other foreign currency).

The Central Bank will continue to monitor market developments and take further measures as required, while ensuring adequate liquidity in the market in order to facilitate smooth operations and sustain market confidence amidst the COVID-19 outbreak.