CBSL announces partial flexibility in forex; revises cap on $ at Rs. 230

The Central Bank last night announced a partial flexibility in foreign exchange rate and revised upwards the cap on the dollar to Rs. 230 from Rs. 203 previously.

The move is amidst CBSL coming under severe pressure to free-up the cap on the exchange rate as the black market is thriving with the dollar being traded at between Rs. 240 to Rs. 260. 

For workers remittances channelled through the banking sector the dollar fetched Rs. 210 as an incentive. However, no revised figure was revealed in yesterday’s CBSL statement. 

However, CBSL said the flexibility with revised cap is in line with the policy package it announced on Friday.

Considering the severity of the external shocks and recent developments in the domestic front, the Monetary Board of the Central Bank announced a comprehensive policy package on 4 March with the view to counter such economic headwinds.

“The Central Bank also indicated that it will continue to closely monitor the emerging macroeconomic and financial market developments, both globally and domestically, and will stand ready to take further measures as appropriate, with the aim of achieving stability in the fronts of inflation, the external sector, the financial sector, and real economic activity,” CBSL said in its statement.

“In that context, greater flexibility in the exchange rate will be allowed to the markets with immediate effect. The Central Bank is also of the view that forex transactions would take place at levels which are not more than Rs. 230 per dollar. The Central Bank will continue to closely monitor the developments in the domestic foreign exchange market and make appropriate policy adjustments accordingly,” CBSL statement added.