Sri Lanka tightens trade rules to boost currency reserves

People walk past the main entrance of the Sri Lanka's Central Bank in Colombo, Sri Lanka March 24, 2017. REUTERS/Dinuka Liyanawatte

COLOMBO, March 12 (Reuters) - Sri Lanka's Central Bank tightened trade restrictions on Saturday, ordering exporters to repatriate foreign exchange earnings within 180 days of transactions in a bid to improve country's depleting foreign exchange reserves.

Sri Lanka is tackling its worst financial crisis in over a decade, struggling to pay for critical imports including fuel, food and medicines and with just $2.31 billion of reserves.

The bank's moves include mandatory currency conversion for exporters of goods and services to change their foreign exchange earnings into Sri Lankan rupees.

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"All licensed banks are required to strictly monitor receipts of goods to Sri Lanka," the central bank stated in a notification, adding that it "has the right to initiate action against non-compliance by any exporter or licensed banks".

The state-run oil company on Friday increased prices by 55 to 95 rupees (22-24 cents) per litre for most fuels to offset losses after Sri Lanka introduced a flexible exchange rate that saw the rupee plunge 30% to 260 rupees to the dollar.

($1 = 250.0000 Sri Lankan rupees)

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Reporting by Uditha Jayasinghe; Editing by Rupam Jain, Stephen Coates and William Mallard

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