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Black, White and Grey Markets: The dynamics of foreign exchange and remittances in Sri Lanka



By Bilesha Weeraratne

Written Ahead of International Migrants’ Day on December 18, 2021

Despite the pandemic and related difficulties in remitting, remittances to Sri Lanka had picked up by December 2020 to record year-over-year growth of 5.8 %, contrary to all expectations.

The reasons for such a quick rebound include catching up on postponed remittances, accumulated terminal employment benefits and savings-related remittances of migrant workers laid off due to the pandemic, receipt of counter-cyclical remittances from less frequent remitters and the shift from informal to formal channels. In the current context of the foreign exchange crisis in Sri Lanka, the latter is the most critical factor to focus on.

From Informal to Formal Channels

The fundamental reason for remitters to shift from informal to formal channels was the accessibility issue during lockdowns or limited physical operations. Similarly, the increased risk of informal channels may have encouraged the use of formal channels. With adjustments to operate under the new normal and easing of lockdown measures, it is reasonable to assume that the informal remittance channels may have also evolved to function during the pandemic. As such, the Central Bank of Sri Lanka’s (CBSL’s) Special Deposit Accounts (SDA), with its 1-2% higher interest rate and the LKR 2 higher foreign exchange rate for remittances channelled through licensed commercial banks (LCBs), were woefully inadequate to retain such recently converted formal remitters.

Black, White and Grey Foreign

Exchange Rates

One of the key attractions of informal remittances is the relatively low cost, partly due to the more attractive exchange rate offered by informal channels. The recent movements in the official LKR/USD foreign exchange rate indicated high pressure towards further depreciation and the excess demand amidst the deteriorating supply of USDs within the Sri Lankan economy resulted in a wide divergence between the exchange rate offered by the LCBs – the white market, and non-bank but authorised money exchangers. The latter can be termed ‘the grey market’ because they are permitted to buy foreign exchange, albeit did at their own rate. The divergence was even more pronounced compared with those of the black market or kerb rate.

Figure 1 below indicates a wide gap exceeding LKR 25 across the different foreign exchange markets from July to November 2021. This gap created an opportunity for informal remittances exchanged in the Sri Lankan grey or black foreign exchange market to be more rewarding to remitters. The extra LKR 2 and the subsequent top-up to an extra LKR 10 offered by the LCBs paled in comparison! Finally, in early December 2021, those in the grey market were forced to adhere to the soft pegged LKR/USD 198-202 rate.

Sources: Author’s compilation based on CBSL data and rates obtained by authorised money exchangers and media articles.


As seen in the top panel in Figure 2, when the CBSL intervention stabilised the LKR-USD exchange rate, formal remittances to Sri Lanka shown in the bottom panel continued on a steeper decline in October and November 2021.

Desperate Measures

In 2021 various mechanisms were rolled out to access foreign currency available in the economy. In May 2021, the CBSL directed that LCBs sell 10% of inward worker remittances converted to the CBSL. In October, a previous directive on the mandatory conversion of merchandise export proceeds was expanded to cover services. The change also shifted away from a 25% limit, to converting the “residual” after utilising goods and services export proceeds.

The Attractiveness of Informal Channels

This latest update has resulted in much confusion. Though the CBSL indicated that this directive would not affect worker remittances, operationally, this does not appear very likely. A single Personal Foreign Currency Account (PFCA) may receive foreign exchange as worker remittances from a family member or a well-wisher and payment for trade-in services. The method of distinguishing the two types of inward remittances is still unclear to many. At the same time, many individuals have already received correspondence from commercial banks requesting to convert the funds in their PFCAs.

Amidst the confusion and effort to protect workers’ foreign currency earnings, more migrant workers are seeking informal channels to remit, while others refrain from or delay remitting. Yet others are diverting their remittances to accounts held overseas.

Sources: Top panel; Bottom panel CBSL, Weekly Economic Indicators, various dates

Early Warning

Remittances are seasonal. As such, official remittances in December may increase. But it should not be prematurely considered an indicator of the success of the recent efforts to increase remittances or divert from informal to formal channels. The departures for labour migration during the first half of 2021 are a mere third of the pre-pandemic departures in the same period in 2019. Many migrant workers who return are unable to find foreign jobs and this depleted stock of Sri Lankan migrant workers is a weak base to prop up formal remittances.

Moreover, domestic economic hardship makes many migrants and families desirous of a possible extra return through informal remittance channels. As such, excessive regulations to clamp down on informal remittances may inadvertently create a breeding ground for even greater informal activities and black markets, thereby proving entirely counter-productive to the intended objectives.

Future efforts to increase remittances should not underestimate the resilience of informal remittance channels crafted along the centuries-old method of Undiyal or Hawala. Thus, instead of overly focusing on shifting from informal to formal channels of remittances, policies should mainly focus on ensuring a more realistic exchange rate. Similarly, it is important to encourage labour migration and trade in services and their remittances.

Link to original blog:

Bilesha Weeraratne is a Research Fellow at IPS focusing on internal and international migration and urbanisation. She is also interested in labour economics, economic development, and economics of sports. Prior to re-joining IPS in 2014, Bilesha was a Postdoctoral Research Associate at Princeton University, USA. Bilesha holds a MPhil and a PhD in Economics from the City University of New York, USA. (Talk to Bilesha –

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DIMO CERTIFIED guarantees peace of mind for vehicle owners seeking a luxury upgrade



DIMO, one of the leading conglomerates in Sri Lanka, is providing customers who are planning to buy pre-owned luxury vehicles, with speedy, hassle-free, trusted service, through its pre-owned vehicle sales arm ‘DIMO CERTIFIED’.

With the re-launch of DIMO CERTIFIED in 2019, the company has expanded its range of pre-owned vehicles beyond Mercedes-Benz & Jeep models by also offering hand-picked and well-maintained Luxury European vehicle brands registered within the past 10 years, under one roof.

With its 80 year history, DIMO offers unparalleled trust and reliability of expertise in the automotive industry where all vehicles come with a minimum of One Year warranty against unlimited mileage. All vehicles handpicked by DIMO CERTIFIED are guaranteed to have genuine mileage with precise servicing and maintenance since the day of import to the country. Vehicles that are bought from DIMO CERTIFIED are assured of a high resale value due to the comprehensive checks done at the time of purchase for resale and thereafter being refurbished to a standard ‘as Good as New’. In the event the new buyer is selling the vehicle at some point in the future, DIMO CERTIFIED also offers a guaranteed buy back facility.

Customers can avail themselves to attractive Personal Contract Plans with lowest interest rates from some of Sri Lanka’s leading financial institutions where they can drive away in their new Luxury European vehicle by making only a 30% down payment. In the event the buyer decides to upgrade to another vehicle prior to the end of the leasing period, DIMO will also step in to settle the balance payment immediately and extend the opportunity to trade-in for another vehicle of their choice.

The highly-reliable DIMO 24-hour Roadside Assistance provides customers ‘peace of mind’ wherever they travel in their vehicle as expert help during a rare breakdown is only a phone call away.

General Manager – DIMO CERTIFIED Pre-Owned Vehicles of DIMO, Tharanga Gunawardena stated, “We have been able to successfully elevate the pre-owned business to a whole new level through our DIMO CERTIFIED service. We have enhanced our services by adding several attractive features to set the benchmark for the automobile industry. Those who want to realize their aspiration of owning a Mercedes-Benz, Jeep or any other Luxury European vehicle need not look elsewhere.”

All the vehicles available at DIMO CERTIFIED along with special offers are displayed on the website and provides a hassle-free way for prospective buyers to access all key details. Customers are assured of the best prices when purchasing their vehicle while special trade-in options are also available for regular customers. With highly-experienced technical professionals providing the best after-sales service, DIMO CERTIFIED customers can enjoy a hassle-free experience with their Luxury European vehicle. A dedicated WhatsApp number 0771449797 has been made available for customers to contact a Sales Consultant directly to enquire about any product or offer listed on the website.

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Chrissworld engages CDS for registrar services



Central Depositary Systems (Pvt) Ltd (CDS), a fully owned subsidiary of the Colombo Stock Exchange (CSE), has strengthened its client base for the provision of registrar services with the addition of Chrissworld PLC. The CDS will provide the listed company with a variety of services such as share ledger maintenance, virtual AGM’s and all types of corporate actions. The CDS plays a role in driving innovation and offering cost effective solutions with value additions.

Speaking at the development, the CEO of the CSE, Mr. Rajeeva Bandaranaike, said, “We welcome Chrissworld PLC to the CDS portfolio. The CDS is uniquely positioned to offer value added Registrar services to listed entities in Sri Lanka, and the CDS is very confident that Chrissworld PLC will fully benefit from the services provided .”

Chairman of Chrissworld PLC, Mr. Christopher Perera stated, “We are very pleased to sign this agreement with the CDS as the registrar. The process of working with the CDS has been a rewarding experience for Chrissworld PLC, and going forward, we are confident that there will be excellent co-operation between the two companies and that the CDS will efficiently manage all our affairs. “

Chrissworld PLC was founded in 2013 and provides third-party logistics services specializing in warehousing, inventory management, distribution, and transportation. The company was listed on the Colombo Stock Exchange on May 18th, 2021, the first ever company to be listed on the Empower Board.

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Women in Management, IFC and Government of Australia recognise inspiring women from Sri Lanka and Maldives



The ‘Top50’ Professional and Career Women Awards 2021 – hosted by Women in Management (WIM), in collaboration with Women in Work, a partnership between IFC and the government of Australia – recently honoured inspiring professional and career women in Sri Lanka and Maldives making a mark in their respective fields.

The 11th edition of the awards ceremony celebrated women representing a wide array of professions from industries including hospitality, banking and finance, logistics and supply chains, entrepreneurship, and media and law, among others, for excellence in either their chosen careers or for inspiring women in their community. The awards also lauded Sri Lankan corporates that have supported the growth and empowerment of women in the workplace.

Top awards were conferred to Dr. Maheshi Ramasamy (Inspirational Professional Woman of the Year), Prof. Nadira Karunaweera (Inspirational Woman of the Year), Aruni Goonetilleke (Trail Blazer), Randhula De Silva (Game Changer of the Year) and Dr. Vajira Chithrasena (Judges Award). The full list of awardees is listed below.

“The 2021 awards are a celebration of resilience, optimism, hard work and growth. As we step into a third year of a pandemic, this year’s winners remind us of the possibilities and opportunities that can exist in adversity,” said Dr. Sulochana Segera, Founder/Chairperson of Women in Management (WIM). “They also remind us of the extraordinary potential women in Sri Lanka and the Maldives are capable of, especially in challenging the status-quo for greater good. Women are often hesitant to take their spot in the limelight, but over the past decade, the Top50 Awards have created a platform helping them showcase their talents and achievements, and importantly to inspire others.”

With over 470 past award winners, the ‘Top50’ Professional and Career Women Awards aim to showcase the significant role women play as leaders, employees, entrepreneurs, and stakeholders in contributing to sustainable and inclusive economic growth in the country.

Marking IFC’s seventh consecutive year in co-hosting the event, Victor Antonypillai, Acting Country Manager for IFC Sri Lanka and Maldives said, that “To ensure a resilient recovery, the path should be gender inclusive – women should be at the heart of the path to recovery. We need to ‘build forward fairer’ for economies and societies to build back better.” Supported through the IFC-DFAT Women in Work program, this year’s Top50 Awards aims to showcase the resilient leadership Sri Lankan women have shown, amid a pandemic.

Also, speaking at the event, David Holly, Australian High Commissioner to Sri Lanka and Maldives remarked that, “Over the years, the ‘Top50’ Awards have shown the power of women in business inspiring many others in leadership and in society more generally. The 2022 Awards are a tribute to the resilience of Sri Lankan women, particularly throughout the COVID-19 pandemic.

The ‘Top 50’ Professional and Career Women Awards 2021 were powered by Dialog, along with Gold Sponsors Salota International and Singer. Silver sponsors for the awards included Lanka IOC, Unilever, Vision Care and Aitken Spence. Maliban and Sampath Bank were also sponsors of the event, and the gifting Partner for the award ceremony was New Vivya.

Speaking of the award winners, Nadija Tambiah, Head of Legal, Secretarial and Corporate Social Responsibility at John Keells Holdings and Chair of 2021 Judging Panel, said that the “quality of the women who were nominated or who applied this year was impressive. We were forced not only to look at the accomplishments of these women in their chosen vocations but also what impact they have had in the industry and what they have done for women in their organisations.”

This year’s Judging Panel—chaired by Nadija Tambiah—included Jayanthi Dharmasena, Managing Director of Hayleys Agriculture Holdings Ltd; Kishu Gomes, Group MD/CEO of Dreamron Group of Companies; Nisthar Cassim, Founding Editor and CEO of Daily FT; Rohantha Athukorala, CEO of Clootrack Sri Lanka/Maldives & Pakistan; Sandra De Zoysa, Group Chief Customer Officer at Dialog Axiata PLC; Sandya Salgado, Strategic Marketing Professional; Santosh Menon, CEO of KL.LK; Amanda Jewell, Acting Australian High Commissioner for Sri Lanka; and Sarah Twigg, Program Manager for Women in Work at IFC.

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