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Foreign exchange swap discounts widen, fears of underworld grabbing kerb market
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.
News
22A: Exclusion of 8 petitions questioned, action filed against SC Registrar, others
The Supreme Court has been petitioned seeking an explanation as to how eight petitions filed against the 22nd Amendment to the Constitution were not listed for hearing . Two of the petitioners, namely Dias Bandaralage Ajith Shantha Kumara Jayathilaka and Gunathilakage Dakum Dulara Gunathilaka, have requested an opportunity to examine the official Registry and parliamentary records so that all material facts may be objectively established. They said that their petitions that had been registered by the Supreme Court should have been heard along with other petitions.
The Registrar of the Supreme Court, Secretary General of Parliament, Speaker and the Attorney General have been named as the respondents.
The five-member bench that heard the petitions consisted of Chief Justice P. Padman Surasena, Achala Wengappuli, J, Arjuna Obeyesekere, J, Sampath B. Abayakoon, J and K.M.G.H. Kulatunga, J.
The petitioners sought the explanation in the absence of any judicial order dismissing, rejecting, striking out, terminating or otherwise disposing the said petitions. They have requested the disclosure of the complete procedural history of the unlisted cases.
The second petitioner Gunathilaka has referred to a speech by Jaffna District Independent MP Ramanathan Archuna in Parliament, on 21 August, 2026, regarding X-Press Pearl, a container carrier that sank off the port of Colombo, and related matters.
They have sought leave to proceed under Articles 17 and 126 of the Constitution and asked for a full Bench of the Supreme Court, or the widest Bench, constitutionally permissible.
They also requested that the Chief Justice and Achala Wengappuli refrain from participating in the hearing and determination of their application, having regard to the objective-appearance issue arising from their prior constitutional and judicial participation in matters forming part of the factual subject matter now requiring examination.
Meanwhile, General Secretary of Vinivida Foundation, Nagananda Kodituwakku, has requested the Supreme Court Registrar not to proceed with the determination of 22nd Amendment process, pending the hearing of fundamental rights petition filed by Chairman of the Vinivida Foundation lawyer, Sugandhika Fernando, seeking a full bench, excluding Chief Justice Preethi Padman Surasena, to hear the petitions challenging the 22nd Amendment Bill. She also requested that the hearing be suspended immediately until the matter was fully heard and determined.
Among the respondents are Chief Justice Surasena, the first respondent, and Attorney General Parinda Ranasinghe. Justices Yasantha Kodagoda, Shiran Gooneratne, Achala Wengappuli and Priyantha Fernando.
(SF)
News
Thailand shuts door on undesirables from Sri Lanka
Sri Lankan passport holders travelling to Thailand wouldn’t be eligible for visa-free entry from 15 September, 2026, according to a new visa notice issued by the Royal Thai Embassy in Colombo.
Under the new measures, all Sri Lankan travellers will be required to obtain a Thai visa before departing for Thailand. Visa applications must be submitted online through Thailand’s official e-Visa system.
The Royal Thai Embassy in Colombo has also clarified that it will not accept visa applications submitted in person or in physical form.
According to the Embassy, tourist visa applications submitted by Sri Lankan passport holders are expected to take approximately 3–7 working days, calculated from the date on which all required documents have been duly completed and submitted.
Processing times for Non-Immigrant Visa and DTV (Destination Thailand Visa) applications may take longer.
Foreign nationals residing in Sri Lanka or the Maldives who hold valid work or residence permits may also require additional processing time.
The Embassy has cautioned applicants that it reserves the right to request additional documents or information when necessary. Applicants may also be asked to attend a visa interview on a case-by-case basis.
The new requirement represents a significant change for Sri Lankan travellers, who will need to complete the visa process before travelling to Thailand from September 15 onward.
The Embassy has urged applicants to rely only on its official communication channels for the latest visa requirements, procedures and updates.
News
Expertise France and the EU launch media project to strengthen environmental journalism in Sri Lanka
A comprehensive new media initiative is officially underway in Sri Lanka following the official signing of agreements with the French media development agency, Canal France International (CFI), and the Sri Lanka Press Institute (SLPI) yesterday. Backed by the European Union-funded Green Recovery Facility programme, the “Media Capacity Building Programme for the Promotion of the Green Transition” aims to strengthen the reporting of environmental, climate, and economic stories across the country.
Environmental journalism in Sri Lanka has traditionally given significant attention to natural disasters and their impacts. This initiative provides an opportunity for journalists to broaden this coverage by exploring a wider range of environmental issues, including climate finance, green investment, sustainable development, biodiversity, and the policy and economic dimensions of the green transition.
The programme will support journalists in strengthening their technical and investigative skills to explore these issues in greater depth and produce sustained, evidence-based reporting. Participants will be equipped with tools to analyse complex climate finance issues, examine public policies, and follow the flow and impact of green investments.
For Sri Lanka, ‘green transition’ is not an abstract concept; it is a pathway to urgently needed macroeconomic stability and sustainable growth. However, for this transition to succeed, the public must be well-informed, and institutions must be held accountable.
By empowering reporters to translate highly technical financial and governance concepts into accessible public-interest narratives, this project ensures that everyday citizens understand how green policies impact their livelihoods, energy prices, and communities. Crucially, it aims to mainstream the lens of ‘just transition’ and gender equity by encouraging the voices and perspectives of women and vulnerable populations to be heard, considered, and taken into account in the national environmental discourse.
The programme is designed to deliver high-impact, nationwide action. Implemented by Expertise France (EF), in partnership with Canal France International (CFI), the Sri Lanka Press Institute (SLPI), and the Ministry of Mass Media as the primary institutional beneficiary, it moves beyond traditional classroom-based learning.
Key highlights of the initiative include:
Trilingual Foundation Training: Intensive capacity building for 60 journalists across Sinhala, Tamil, and English media to ensure nationwide reach and inclusivity.
Mentored “Story Labs”: The rollout of six intensive Story Labs where journalists will receive direct editorial mentoring to investigate, produce, and publish high-quality, data-driven green transition stories
Youth Outreach: Engaging journalism students and young media practitioners through university and youth activities to develop stories on green transition and public policy issues.
Learning and Sharing Networking Event: Bringing together journalists, experts, policymakers, and key stakeholders to share learning, showcase stories produced through the programme, reflect on knowledge gained, and develop future story ideas on green transition issues.
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