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Foreign exchange swap discounts widen, fears of underworld grabbing kerb market

Published

4 years ago

2021/12/12

ECONOMYNEXT – Upside down rates in Sri Lanka’s rupee dollar swap discounts continued to widen last week and market participants lamented the movement of higher share of kerb market foreign exchange to the underworld after a crackdown on authorized money changers.

In the official foreign exchange market swap discounts continued to widen, reflecting low rupee yields and low dollar availability for funding purposes, market participants said.

The spot/one month was quoted -170/-150 cents this week.

The spot two months was -325/-275 cents

The spot/three months was -500/-450 cents

The spot/six months was -800/-750 cents

A swap discount of 750 indicates that a market participants who sells dollars today at (say) 200 rupees in the swap market will get it back roughly for 192.50 (a discount) in six months, despite continued reserve losses indicating that the peg is under pressure.

The central bank has also forced dollar earnings of exporters and service providers to be converted, indicating that dollar deposit growth will slowdown further, hurting the funding books of banks, analysts warn.

Sri Lanka’s state banks had been among key borrowers in the swap market. State banks have large dollar loans to state-run CPC in particular.

The CPC had been forced to borrow dollars when the central bank printed money to target a call money rate in the past as well creating forex shortages. Attempts are underway to get credit lines and further expand dollar borrowings of the CPC.

This week the central bank raided several authorized money changers who have been exchanging dollars at above the official non-credible peg of 200 rupees to the US dollar.

Sri Lanka’s authorized money changers are mostly long standing businesses which have operated across generations. Many belong to the Tamil and Muslim communities.

The communities had been engaged in cross-border trade from the British period and beyond.

“Most of my business is going to the underworld,” a traditional kerb market merchant lamented earlier this week after the first raids of authorized money changers took place.

Hawala operators may also get additional business discouraging people from bringing notes to the country, another said.

There was also a possibility of forged dollar notes being circulated as the underworld expands the business, market participant warned.

Sri Lanka is a country where there was hardly any forged dollar notes due to the screening done by the longstanding kerb market community which included authorized money changers.

Though international card fraudsters targeted credit cards and ATMs in Sri Lanka forged dollar note operators could not target Sri Lanka due to the business practices of the domestic kerb market, those familiar with the practice say.

Forged foreign currency notes operators are active in countries like Indonesia.

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President meets senior officials of the Urban Development Authority

Published

5 hours ago

2026/05/18

Priyan

A discussion between President Anura Kumara Dissanayake and senior officials of the Urban Development Authority (UDA) was held this afternoon (18) at the Presidential Secretariat.

The meeting focused extensively on new development projects planned by the Urban Development Authority. The President emphasised the need to ensure that the budgetary allocations made for these projects in the current year are utilised effectively within the same financial year.

Detailed discussions were also held on projects planned to be implemented jointly by multiple institutions, including the importance of holding consultations with all relevant agencies to reach final decisions and the need to clearly define responsibilities for each institution in both implementation and maintenance phases of the projects.

Attention was drawn to key initiatives such as the Kelani River flood control project, water management projects in Colombo city and the Beira Lake restoration project. The need for a dedicated programme for low-income housing in areas such as Ratmalana and Moratuwa was also highlighted. During the discussion, Minister of Transport, Highways and Urban Development Bimal Rathnayake underscored the importance of introducing a structured management framework for the effective coordination of certain projects.

Deputy Minister of Urban Development, Eranga Gunasekara, Secretary to the Ministry of Transport, Highways and Urban Development, Senior Professor Kapila C.K. Perera, Chairman of the Urban Development Authority (UDA), M.G. Hemachandra and the Heads representing the Urban Settlement Development Authority (USDA), Sri Lanka Land Development Corporation (SLLDC), National Physical Planning Department (NPPD) and the Condominium Management Authority (CMA) were also present at the meeting.

(PMD)

News

CEAT Kelani Branch Inter-Company Employees’ Union makes donation to the ‘Rebuilding Sri Lanka’ Fund

Published

5 hours ago

2026/05/18

Priyan

The Inter-Company Employees’ Union of the Kelaniya Branch of CEAT Sri Lanka has made a financial donation of Rs. 1,148,000.00, a day’s salary of its members to the ‘Rebuilding Sri Lanka’ Fund established to support the restoration of livelihoods and the rebuilding of areas affected by cyclone Ditwah.

Secretary of the Inter-Company Employees’ Union of the CEAT Kelani Branch, D.G.S.D. Navaratne, handed over the donation to the Chief of Staff to the President, Prabhath Chandrakeerthi at the Presidential Secretariat this morning (18).

Treasurer of the Inter-Company Employees’ Union of the CEAT Kelani Branch, Y.P.I.C. Karunathilaka, together with members of the Executive Committee, were also present on the occasion.

(PMD)

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Prime Minister off to the United Kingdom to participate in the 22nd Annual Commonwealth Education Forum

Published

6 hours ago

2026/05/18

Priyan

Prime Minister Dr. Harini Amarasuriya departed on an official visit to the United Kingdom to participate in the 22nd Annual Commonwealth Education Forum and the Commonwealth of Learning (COL) 2026 Board of Governors Meeting.

During the visit, the Prime Minister is scheduled to participate in several high-level academic and diplomatic engagements aimed at strengthening cooperation in the fields of education, development studies, research collaboration, and international partnerships.

As part of the visit, the Prime Minister will meet with Ms.Bridget Phillipson, Secretary of State for Education of the United Kingdom, at the UK Department for Education, to discuss areas of cooperation in education and related sectors. She is also expected to meet Ms.Yvette Cooper, Foreign Secretary of the United Kingdom, for discussions on matters of bilateral interest and cooperation between Sri Lanka and the United Kingdom.

In addition, the Prime Minister is expected to meet Ms.Shirley Ayorkor Botchwey, Secretary-General of the Commonwealth, on the sidelines of the 22nd Annual Commonwealth Education Forum and the Commonwealth of Learning (COL) 2026 Board of Governors Meeting.

During the visit, the Prime Minister will attend a public event at the Institute of Development Studies at the University of Sussex and she will also take part in the ceremony marking the 60th Anniversary of the Institute of Development Studies. The Prime Minister is also scheduled to address a session at the Oxford School of Global and Area Studies at the University of Oxford, followed by a question-and-answer session with scholars and students.

The visit is expected to strengthen Sri Lanka’s engagement with academic institutions, international development partners, and Commonwealth member states, particularly in the areas of education, research, policy dialogue, and capacity building.

[Prime Minister’s Media Division]