Sri Lanka's central bank said on Monday it will lift all restrictions on people sending money earned in foreign currencies outside the country this week, in a move aimed at reassuring investors as the local rupee hits record lows. The new rule does not apply to foreign currency bought with Sri Lankan rupees, however. The rupee hit a record low on Monday due to a shortage of dollars in the market and has been under pressure from exporters' reluctance to convert dollars and from slow inward remittances.
While the authorities have encouraged savings in foreign currencies, resident and non-resident foreign currency account holders have not been allowed to send earnings made in foreign currencies abroad freely. "With this move, you will have foreign currency accounts with the banks that can be utilised to any purpose. No questions will be asked," Central Bank Governor Arjuna Mahendran told reporters.
Deputy Governor N. Weerasinghe said account holders can only freely transfer money earned in foreign currencies, however. The island nation has relaxed many restrictions on foreign exchange including allowing offshore investors into rupee denominated debentures, letting local firms borrow from foreign sources and allowing foreign investors to open foreign currency accounts.
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