Sri Lanka money broker on the dock

ECONOMYNEXT – A money broker in Sri Lanka has been slapped with a one-month trading ban over breaching rules covering forex and money markets, an official said.

Sri Lanka’s central bank examined had earlier said it was probing intermediaries for speculative trading after the rupee fell sharply from April, amid excess liquidity in interbank markets and tightening external conditions.

Money brokers play a useful role in conveying quotes in forex, money and fixed income securities markets, to actual sellers and buyers.

The central bank had said it will investigate dealers who engage in unwarranted speculation on the exchange rate.

"It is difficult at the moment, given the kind of data that we have to separate speculation from fundamentals," Central Bank Governor Indrajit Coomaraswamy said.

"We are now putting in place a framework for data collection that will in future, help us to undertake that exercise better."

Sri Lanka has operated a permanently depreciating soft-peg with the US dollar from 2011, which the International Monetary Fund has classified as a "crawl-like arrangement" as of March 31, 2017, which is neither a working peg nor a floating rate, and is inherently unstable especially when there is excess liquidity in money markets. (Colombo/July12/2018)

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