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Remittances rising rapidly: Banks

20 Mar 2022

  • Say kerb market hindering full benefits of floated rupee
Licensed Commercial Banks (LCBs) operating in Sri Lanka have recorded a significant increase in foreign remittances to the banks, following the announcement by the Central Bank of Sri Lanka (CBSL) on 7 March to lift the cap of Rs. 203 imposed on the US Dollar. Speaking to The Sunday Morning Business, a senior official of Bank of Ceylon (BOC) revealed that the decision by the CBSL was effective as there had been a significant rise in the number of foreign workers now sending their money through BOC accounts.  “Rather than keeping the exchange rate at the Rs. 203 level, expatriates are happy to send their money through the formal channel for the rate of Rs. 265 to Rs. 275. Compared to February 2022, we have a significant improvement,” the official added.  However, the official did not wish to disclose the percentage increase or reveal any statistical data due to competitor-related confidentiality. Further, he highlighted that the only negative factor still hindering the operation to its fullest potential in receiving worker remittances was the operation of the kerb market, which was still offering a higher rate than the LCBs operating in the country.  The official optimistically stated: “With the rate of remittances we are receiving by now, we will be able to recover our lost foreign remittances income in the next few months. Thus, this move by CBSL is very good and we are very happy with the results. Moreover, we are now in the process of intensifying our promotional campaign to attract more remittances.” Sampath Bank Group Senior Deputy General Manager – Group Marketing, Deposit Mobilisation, and Digitalisation Tharaka Ranwala stated that there had been a significant increase in worker remittances coming into the bank since last week.  “From last week, we have seen quite a big surge in remittances coming into the bank. The inflows are very very visible since the announcement and I think it is a good move by the CBSL. Now it’s up to the banks to do their promotions and also expats living abroad to send their money through formal channels,” Ranwala said.  Another official from Hatton National Bank, who wished to remain unidentified, stated that there has been an increase of 200% in foreign remittances received by the bank.  Attempts to contact Commercial Bank of Ceylon, People’s Bank, and National Development Bank PLC were futile. Meanwhile, an official from the CBSL’s Foreign Remittance Facilitation Department speaking on the condition of anonymity stated that it was too early to comment as the local banks were yet to update the CBSL with the finalised statistical report. The CBSL fixed the exchange rate at Rs. 203 for over six months from early September 2021, before finally giving up its attempt to hold the exchange rate on 7 March 2022. Making an announcement on 7 March, the CBSL noted: “Greater flexibility in the exchange rate will be allowed to the markets with immediate effect. The Central Bank is also of the view that forex transactions will take place at levels that are not more than Rs. 230 per US Dollar.”  In the aftermath of this announcement, the Sri Lankan Rupee initially depreciated against the US Dollar to Rs. 270, due to the confusion created by the CBSL’s cryptic announcement, and the market initially operated on the belief that the exchange rate had once again been capped at Rs. 203. Meanwhile, according to reports, as of 17 March the kerb market exchange rate had readjusted to hover at around Rs. 300-305 despite the continuous devaluation of the Sri Lankan Rupee over the past two weeks by around Rs. 35.5%.  – By Yakuta Dawood 


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