CB takes steps to stem the undue depreciation of rupee

The Central Bank of Sri Lanka (CBSL) is of the view that the recent increase in volatility of the exchange rate is ‘unwarranted’ and ‘unacceptable’.

Hence, issuing a statement, the CBSL stated that it will take appropriate action aggressively hereafter to contain this volatility in the domestic foreign exchange market.

The Central Bank expects that these actions, together with the continuation of the curtailment of non-essential imports, will enable the Rupee to appreciate within the next few days towards the levels of below Rs. 185 per US dollar observed in November 2020.

Further, the CBSL reiterates that official reserves remain at sufficient levels. At present, gross official reserves are at US dollars 5.6 billion.

Moreover, the Central Bank stated that discussions with its domestic and foreign counterparts to boost the level of reserves are also reaching an advanced stage of conclusion.

“The receipt of these expected inflows as well as the ongoing improvements in the domestic production economy leading to the expansion of foreign exchange earnings will facilitate the maintenance of exchange rate stability, while meeting Sri Lanka’s debt obligations on time, in the period ahead as well,”  the CBSL stated.

The Sri Lankan rupee has come once again under pressure and continued to trade weaker on back of COVID-19 pandemic effect.

According to the daily exchange report of the Central Bank of Sri Lanka (CBSL), the buying rate of a US dollar stands at Rs.189.08 today (24) whilst selling rate of a US stands at was at Rs.194.66.  This is highest buying and selling rate recorded for a US dollar since, April 30, 2020.

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