The Central Bank (CB) will announce a relaxation of exchange controls pertaining to foreigners investing in instruments such as debentures, etc, this month, CB sources said. “We will announce some relaxations this month pertaining to allowing foreigners to invest in instruments such as debentures," CB source told the Business Times.
He said that the CB’s in a comfort zone now that it’s got $ 6.1 billion in reserves. He said that exchange controls are usually maintained in the belief that they help to protect a country’s currency and its foreign exchange reserves and since CB is tanking up its reserve base, such relaxations can be allowed.
The source said that presently foreigners are allowed to buy debentures with special permission. “The cabinet sanctioned only certain categories of foreigners to buy the recently issued Sri Lanka Development Bonds,” he said adding that with exchange controls being relaxed foreigners can purchase such instruments.
Such relaxations were also mooted by the Colombo Stock Exchange recently, in a bid to boost the share market.
The CB permitted locals to open accounts in foreign countries, earlier this year. “Relaxing antiquated exchange controls was a welcome move by the Central Bank. In fact it should have been done decades ago. We shall never develop into an international financial centre while there are 'Capital Account' controls,” an analyst noted.