Regulatory Alerts2021-01-25 | Banking Act Direction No. 2 of 2021Forward Sales and Purchases of Foreign Exchange by Licensed Commercial Banks
The Monetary Board of the Central Bank of Sri Lanka has directed licensed commercial banks to suspend forward foreign exchange contracts for three months effective immediately. Issued under Section 46(1) of the Banking Act No. 30 of 1988, this directive aims to curb excess market volatility and mitigate risk management pressures on financial institutions. All licensed commercial banks must refrain from entering into new forward contracts during the specified period to ensure broader market stability.
MONETARY BOARD CENTRAL BANK OF SRI LANKA
25 January 2021 | BANKING ACT DIRECTIONS | No. 02 of 2021
FORWARD SALES AND PURCHASES OF FOREIGN EXCHANGE BY LICENSED COMMERCIAL BANKS
Issued in terms of the powers conferred by Section 46(1) of the Banking Act No. 30 of 1988, as amended.
In view of the need to avoid excess volatility in the foreign exchange market and the impact on banks’ risk management, licensed commercial banks are hereby informed to refrain from entering into forward contracts of foreign exchange for a period of three months with immediate effect.
(Signature)
Prof. W D Lakshman Chairman of the Monetary Board and Governor of the Central Bank of Sri Lanka