Sri Lanka wants to narrow gap between to spot and forward forex rates
ECONOMYNEXT – The central bank increased the reference rate for the rupee to ‘compress’ the difference between spot and forward rates in the forex markets, Central Bank Governor Indrajit Coomaraswamy said.
He said there was probably some moral suasion involved in the spot rate, where there was no trades, and most of the transaction was in one and two week markets.
Coomaraswamy wanted the gap to compress through an ‘orderly’ adjustment.
"We don’ts see much pressure on the exchange rate now," he said.
The Central Bank expected to buy about 1.2 billion US dollars from the markets, he said.
He said a ‘competitive exchange rate’ was needed to boost exports.
Sri Lanka’s rupee collapsed in 2016 firing a burst of inflation close to 8 percent this year, despite moderate global inflation. (Colombo/May09/2017)