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Dollar Sales: Sri Lankan Exporters to suffer on making Exchange gains and having access to lower borrowing against their dollars now under Maithripala-Ranil-Ravi Regime: Look at What the latest move of Ranil,,Ravi, Harsha,Mahendran fame their worst decision they took from yesterday to control dollar amidst their urgent international borrowing and other effects,Now country's top sector that balance our trade deficit will be paying an unnecessary fee to treasury and banks whilst exporters are required to convert their dollars without holding immediately...Read a Reuters report that says:The Central Bank has imposed a 5% penalty on exporters who hold dollars for more than 90 days, and a 2% monthly penalty thereafter, currency dealers said. - Post Note: - Wielding the big stick and attempts at direct external control over normal commercial transactions usually has a down-side and often leads to unintended consequences.
Sri Lanka will impose penalty interest rates on exports from June 1 to force exporters to covert dollars reviving measures usually imposed by the Central Bank during a balance of payments crisis.
In a circular issued to banks, exporters with packing credit facilities who do not use export proceeds to settle the accommodations after 90 days will be charged a five percent penal interest and then two percent for every month for every month they delay. Exporters can borrow rupees and keep their dollars without settling their export credit facilities expecting the rupee to depreciate. Sri Lanka first imposed similar regulations with a 10 percent extra penalty rate, during a balance of payments crisis in 2001.
The regulator told banks in a new direction that the circular is re-imposed but with a five percent penalty rate instead of 10 percent which will be effective from June 1.
- See more at: http://www.dailynews.lk/?q=local/penal-interest-rates-force-exporters-convert-dollars#sthash.WaMLTeUO.dpuf
Reuters Reported
Sri Lankan rupee forwards ended firmer on Thursday, gaining for a third straight day on dollar sales amid expectation that the unit would rise further due to expected inflows, while the spot currency traded steady as a state-run bank sold the greenback, dealers said.
One-week forwards, which were actively traded, ended at 134.10/20 per dollar, compared with Wednesday's close of 134.20/30.
Three-month forwards, which have been actively traded over the last few weeks in the absence of spot, ended steady at 135.70/136.00 per dollar.
The spot rupee was steady at 133.90 per dollar as a state-run bank, through which the central bank usually directs the market, sold dollars at 133.90 for a third straight day, dealers said.
"The pressure eased as a state-run bank sold dollars. The market expects the rupee to appreciate in the short run," a currency dealer said asking not to be named.
On Monday, the spot currency started trading after nearly six months after the island nation raised nearly $1 billion from bond sales last week.
Sri Lanka raised $650 million last Thursday through an international sovereign bond sale and $388 million from development bonds.
Dealers said exporters may start selling dollars as inflows from the dollar bond sale would help boost the rupee.
The central bank has imposed a 5 percent penalty on exporters who hold dollars for more than 90 days, and a 2 percent monthly penalty thereafter, currency dealers said.
Exporters have been reluctant to convert dollars into the local currency as it is cheaper to manage costs with rupee loans in a lower interest rate environment.
http://www.brecorder.com/markets/fxmm/asia/244710-sri-lankan-rupee-forwards-rise-amid-dollar-sales.html
Penal interest rates to force exporters to convert dollars
Sri Lanka will impose penalty interest rates on exports from June 1 to force exporters to covert dollars reviving measures usually imposed by the Central Bank during a balance of payments crisis.
In a circular issued to banks, exporters with packing credit facilities who do not use export proceeds to settle the accommodations after 90 days will be charged a five percent penal interest and then two percent for every month for every month they delay. Exporters can borrow rupees and keep their dollars without settling their export credit facilities expecting the rupee to depreciate. Sri Lanka first imposed similar regulations with a 10 percent extra penalty rate, during a balance of payments crisis in 2001.
The regulator told banks in a new direction that the circular is re-imposed but with a five percent penalty rate instead of 10 percent which will be effective from June 1.
- See more at: http://www.dailynews.lk/?q=local/penal-interest-rates-force-exporters-convert-dollars#sthash.WaMLTeUO.dpuf
Reuters Reported
Sri Lankan rupee forwards ended firmer on Thursday, gaining for a third straight day on dollar sales amid expectation that the unit would rise further due to expected inflows, while the spot currency traded steady as a state-run bank sold the greenback, dealers said.
One-week forwards, which were actively traded, ended at 134.10/20 per dollar, compared with Wednesday's close of 134.20/30.
Three-month forwards, which have been actively traded over the last few weeks in the absence of spot, ended steady at 135.70/136.00 per dollar.
The spot rupee was steady at 133.90 per dollar as a state-run bank, through which the central bank usually directs the market, sold dollars at 133.90 for a third straight day, dealers said.
"The pressure eased as a state-run bank sold dollars. The market expects the rupee to appreciate in the short run," a currency dealer said asking not to be named.
On Monday, the spot currency started trading after nearly six months after the island nation raised nearly $1 billion from bond sales last week.
Sri Lanka raised $650 million last Thursday through an international sovereign bond sale and $388 million from development bonds.
Dealers said exporters may start selling dollars as inflows from the dollar bond sale would help boost the rupee.
The central bank has imposed a 5 percent penalty on exporters who hold dollars for more than 90 days, and a 2 percent monthly penalty thereafter, currency dealers said.
Exporters have been reluctant to convert dollars into the local currency as it is cheaper to manage costs with rupee loans in a lower interest rate environment.
http://www.brecorder.com/markets/fxmm/asia/244710-sri-lankan-rupee-forwards-rise-amid-dollar-sales.html
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