Government introduces a scheme to insure investors

Government introduces a scheme to insure investors

18 October 2020 10:57 pm

The Central Bank has introduced a scheme to insure investors against foreign exchange risk, by allowing domestic currency proceeds from qualified investments in treasury bonds to be converted at the same exchange rate as prevailed at the time of initial investment.

There are also import restrictions of certain goods, as well as prohibiting commercial banks facilitating imports of vehicles. Outward remittances have been suspended, while inward remittances will be exempted from certain regulations and taxes

As of early September, there have been net capital outflows of around US$500 million (0.6 percent of GDP) since mid February, mostly from the domestic treasury securities market. The Sri Lankan currency has also depreciated by around 2 percent against the US dollar since that time.

During the year up to 16th October 2020 the Sri Lankan rupee depreciated against the US dollar (1.7 per cent). Given the cross currency exchange rate movements, the Sri Lankan rupee appreciated against the Indian rupee (1.3 per cent) and the pound sterling (0.2 per cent) while depreciating against the Euro (5.8 per cent) and the Japanese yen (4.7 per cent) during this period, Central Bank data showed.

Weekly AWPR for the week ending 16th October 2020 increased by 19 bps to 6.51 per cent compared to the previous week

The reserve money increased compared to the previous week mainly due to the increase in currency in circulation and deposits held by the commercial banks with the Central Bank.

The total outstanding market liquidity was a surplus of Rs.123.111 bn by end of this week, compared to a surplus of Rs.117.969 bn by the end of last week.