ECONOMYNEXT – Chamila*, senior finance manager of an export company whose parent company is beyond Asia, has been under tremendous pressure when his parent company asked him to come up with measures to keep most of the company’s dollar earnings outside Sri Lanka.
The request came not because Sri Lanka’s central bank made it mandatory to bring and declare all the export earnings to the island nation.
But because the central bank has forced them to convert all their export proceeds from dollars to rupees amid an increasing risk of sharp depreciation as the central bank has ordered the exchange to be 200 while the gray market rate is around 240 to 250 rupees.
The central bank is unable to enforce maintain the 200 rupees to the US dollar peg as it is simultaneously printing money to enforce a 6.0 percent policy rate with budget deficit close to 10 percent of gross domestic product and inflation running at…
