Cabinet on Monday approved a proposal by Prime Minister Mahinda Rajapaksa in his capacity as Finance Minister to several measures to be taken to minimize the foreign exchange risk that may occur to Licensed Commercial Banks.
Cabinet was informed that the Central Bank of Sri Lanka has identified the need to facilitate non - resident investors to enable to invest in government securities and other sectors to encourage the inflow of foreign currency into the country.
Approval to introduce US Dollars/Sri Lankan Rupees buying and selling exchange facilities for a period of one to two years has been given by the Monetary Board of CBSL.
The measures will include conducting the initial foreign exchange transaction and subsequent exchange transactions at the same exchange rate and concerning the foreign exchange transactions prior to the maturity of the investment, granting permission to exchange at the prevailing foreign exchange rate subject to a penalty.
This facility is applicable only if foreign exchange inflows into the country and subject to a minimum of US $ 25 million and a maximum of US $ 1000 million.
In the case of depreciation of the exchange rate of the US $ s/ the Sri Lankan Rupees during the implementation of this measure, the CBSL will compensate the loss incurred to the Central Bank of Sri Lanka when transferring its dividends to the Treasury in the future as the loss that could be incurred to the Central Bank of Sri Lanka enable to consider as a cost to the Treasury