{"id":121084,"date":"2021-12-10T17:11:45","date_gmt":"2021-12-11T00:11:45","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=121084"},"modified":"2021-12-10T17:11:45","modified_gmt":"2021-12-11T00:11:45","slug":"maintaining-dual-exchange-rates-in-sri-lanka","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2021\/12\/10\/maintaining-dual-exchange-rates-in-sri-lanka\/","title":{"rendered":"MAINTAINING DUAL EXCHANGE RATES IN SRI LANKA"},"content":{"rendered":"<h2><span style=\"color: #0000ff;\"><em><strong data-rich-text-format-boundary=\"true\">BY EDWARD THEOPHILUS<\/strong><\/em><\/span><\/h2>\n\n\n<p>Recently,\nthe Central Bank of Sri Lanka has announced it will pay Rs.10 more than the\nofficial buying rate for US Dollar remittances to Sri Lanka, and people working\noverseas are confused with the new practice because the new exchange management\nregime has not shown that currencies, which remit to Sri Lanka other than US\ndollars are eligible to claim additional local currency incentive in the new\nregime. The other aspect is whether the Central Bank will charge rupees 10 more\nthan the official rate for the US dollars that going out for various payments. The\ndetailed information is required because of the way FEECS system implemented\nbetween 1968 to 1978, new management regime insists in the country it will be\nhelpful Sri Lanka to adjust with a new regime.<\/p>\n\n\n\n<p>Sri\nLanka had been maintained a dual exchange rate regime since 1968 until the\nFEECS system was removed in 1978 by the changing economic policies starting for\na market economic system. After the independence in 1948, a significant\ninfluence on the exchange rate regime of Sri Lanka was the situation experienced\nafter the Korean War in the early 1950s, which forced Sri Lanka to sign a\nRubber\u2013Rice pact with China, and the official depreciation of the foreign value\nof Sri Lanka rupee in 1967. The depreciation was essential part with the\ndepreciation of British Sterling pound. Sri Lanka Rupee was linked to the\nBritish Sterling pound by the Currency Board System operated in the colonial\nera. &nbsp;<\/p>\n\n\n\n<p>Introducing\nthe FEECS system in 1968 (Foreign Exchange Entitlement System) for foreign\nexchange buying and selling was a good policy decision on the advice of the\nInternational Monetary Fund. It was a dual exchange rate regime and\nsuccessfully worked to control domestic inflation and foreign exchange outgoing.The\nnew regime introduced by the Central Bank of Sri Lanka would be useful to &nbsp;manage foreign exchange coming in an outgoing,\nhowever, many people in the country have no idea about dual exchange regime the\nbest example for this point was the views of Mr.Eran Wickramaratne, who participated\nin a TV program, Pathikada.<\/p>\n\n\n\n<p>From\n1968 to 1978, the FEECS rate changed several instances, and despite the\ncriticism of many left political parties, when Dr.N. M. Perera become the\nMinister of Finance after the 1970 Election, continued maintaining the dual\nexchange rate regime, most probably understanding the significance of a dual\nexchange regime for the country. When it independently analyses, it could see\nthat the foreign exchange demand for various purposes had been in slower growth\nand people demanded foreign exchange for limited purposes. After 1978, foreign\nexchange demand for various purposes has been increased by liberal economic policies.\nThe government policy has been supporting exchange demanding the import of\ngoods and services that were conceived in the country. For example, many retail\nproducts and services could have originated domestically instead of importing,\nand Sri Lanka could provide education services domestically rather than sending\nkids overseas for education. Recent PANDORA papers disclosed that certain\nofficers who worked in the Government Treasury misused the new regime after\n1978 for gaining undue enrichment.<\/p>\n\n\n\n<p>A\ndual exchange rate management despite the cry of many countries would be\nsuitable to main a balanced economy and to build foreign exchange reserves. To\nstabilize the foreign value of the Sri Lanka rupee is a significant strategy\nand the market process should be applied when the exchange reserve would\nincrease to the US $ 25 billion. If it analyses the way outgoing component of\nexchange it could be found the way how wasted the reserve and workout a good\nmanagement regime.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>BY EDWARD THEOPHILUS Recently, the Central Bank of Sri Lanka has announced it will pay Rs.10 more than the official buying rate for US Dollar remittances to Sri Lanka, and people working overseas are confused with the new practice because the new exchange management regime has not shown that currencies, which remit to Sri Lanka [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[],"class_list":["post-121084","post","type-post","status-publish","format-standard","hentry","category-edward-theophilus"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/121084","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=121084"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/121084\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=121084"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=121084"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=121084"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}