Daily Variable ‘Spot’ Band introduced in consultation with market – CBSL Governor

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Central Bank of Sri Lanka (CBSL) Governor Dr Nandalal Weerasinghe yesterday told reporters that the ‘market ‘spot’ band” effective since last Friday (13 May) was as a result of consultations with the market.

This was in response to a question at a Media briefing held at CBSL Headquarters, Colombo, as to whether this ‘band’ was an outcome of the current talks that CBSL is having with the IMF?

He said that talks with the IMF will lead to an IMF programme.

The Governor said that the guided ‘spot’ was effective and expected the ‘spot’ to strengthen as a result. He however refused to say how remittances fared last month (April), but said that such information will be released at the appropriate time by CBSL.

Meanwhile, the IMF on Tuesday (17) refused to comment on the Central Bank of Sri Lanka’s (CBSL’s) introduction of a daily variable administered ‘spot’ band in the interbank foreign exchange (FX) market effective from Friday (13).

When ‘Finance Today’, by e.mail on Monday (16) asked IMF’s Team Leader for Sri Lanka, Masahiro Nozaki, for IMF’s stance in respect of the same, IMF’s Media Relations Division’s Pemba Sherpa, responding on behalf of Nozaki, also by e.mail, yesterday on Tuesday (17) said, “The IMF team is currently on mission discussing with the Sri Lanka authorities and as per our guidelines we cannot comment on it. We will get back to you once the mission is over.”

Sri Lanka is currently seeking an IMF loan to tide over its FX crisis. IMF in response has laid down two conditions to start talks on the same. Those are the institution of a stable Government to start such talks and the other, an agreement to be first reached with foreign lenders to restructure Sri Lanka’s foreign debt.

On12 April 2022 Sri Lanka, declaring itself bankrupt, stopped servicing its foreign loans, with the exception of loans taken from multilateral creditors and also Sri Lanka development bond holders.

By Paneetha Ameresekere