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Tuesday May 17th, 2022
Economy

Sri Lanka to freeze bank accounts linked to informal remittance amid forex crisis

ECONOMYNEXT – Sri Lanka will freeze accounts of persons who distribute and receive remittances at higher than official rates through informal channels, Central Bank Governor Nivard Cabraal has said as forex shortages persisted.

“Bank accounts of those who distribute and receive #money through #unlawful money transmission methods will be frozen with immediate effect,” Governor Cabraal said in a twitter.com message.

The official rate of exchange that banks give to families of Middle Eastern workers is around 200 to the US dollar, but the parallel exchange rate is around 240 to the US dollar.

The central bank has created an official multiple exchange rate at 210 to the US dollar paying a 10 rupee premium during December up from 2.0 rupees earlier.

The earlier 2 rupee was swallowed up in the bank buying rate of around 197.50 to the US dollar.

Sri Lanka has printed record volumes of money since around February 2020, depleting forex reserves as convertibility was provided to the new money but parallel exchange rates developed after credit picked up and convertibility was reduced.

Banks are now rationing dollars and the credibility of the peg had been lost. (Colombo/Dec02/2021)

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