The forex and capital markets were rattled by the Central Bank’s unofficial move to maintain a fixed rate for the rupee to the dollar.
Monetary Regulators are requesting the banks’ corporation to ensure that the dollar exchange rate does not go beyond the “formally agreed” LKR 200 – 203 range as opposed to the LKR 225 – 235 official rate in the forex market. The dollar exchange rate was whopping LKR 240 -250 in the black market.
The forex market remained largely inactive as the stock market dipped and the bond market froze. The governor instructed all local banks to ensure that the rate does not deteriorate calling it a matter of greater national interest. The governors writing to the CEO’s has been dubbed by critics as an “immoral suasion”
The Central Bank also stressed that in these critical times that the bank should not work in silos in the hopes of safeguarding private interests.
The unofficial peg by the Central Bank has been met with mixed reactions from different stakeholders.
No.820, Mount Cresent,Malabe,Sri Lanka