By Hiran H. Senewiratne

The Central Bank will lower the limit on public currency note holdings to US$10,000 from US$15,000 and crack down on anyone holding such notes for more than three months in violation of regulations, Bank Governor says centre, Dr. Nandalal Weerasinghe.

“Under the Foreign Exchange Act of Sri Lanka, a new circular will be issued in which banknotes held in violation of the rules will be seized. Therefore, all banknote holders will have a 14-day grace period from today and then they will have to deposit the money in the banking system, Weerasinghe added. The Governor made the remarks during the Central Bank’s Monetary Policy Review Meeting held at the Central Bank Auditorium yesterday. He said the CBSL Monetary Council decided to maintain the current monetary policy stance. Recently, two seizures had taken place.

Police and Central Bank officials will take action to seize foreign currency held by the public in violation of the law. Many people had notes at home and also in bank vaults, the governor said. Weerasinghe explained that the Monetary Council, in its meeting held the previous day, had decided to maintain the Central Bank’s Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) at their levels. of 13.50% and 14.50% respectively.

Weerasinghe added: “Although inflation is expected to remain elevated in the near term, the substantial policy measures taken by the Council, at its meeting on 8 April 2022, combined with other measures to stem firming demand pressures aggregate, are expected to contain any further build-up in inflation expectations and dampen inflationary pressures in the period ahead.

“Market interest rates have notably adjusted upwards, reflecting the significant monetary policy tightening measures taken by the Central Bank in April 2022.” the sharp depreciation of the Sri Lankan rupee against the US dollar. However, inflation is expected to moderate thereafter, reflecting the impact of corrective Central Bank measures and expected improvements in domestic and global supply conditions.

“We expect economic growth to experience a setback this year as economic activity is expected to be significantly affected by ongoing supply shortages, energy-related issues and social tensions.” The policy measures implemented by the Central Bank must be reinforced with adequate and timely measures. political adjustments by the government. In order to prevent a further deterioration of economic conditions and to complement the efforts of the Central Bank implemented so far, urgent measures are needed to restore greater political stability through consensus governance and harmony. social.