In the wake of floating the rupee workers remittances in March ended their month-on-month declining course with a modest gain
Workers remittances in March amounted to $ 318.4 million bringing the first quarter haul to $ 782.5 million. From a year earlier, the cumulative figure is down by 58%.
In January, workers remittances amounted to $ 259 million and February it was $ 205 million.
The gain in March can be partly linked to the free float of the currency which saw the rupee plunge by over 30% in early March.
During the year up to 22 April, the rupee depreciated against the dollar by 40.1%. Given the cross-currency exchange rate movements, the rupee depreciated against the Japanese yen by 33.1%, the euro by 37.5%, the pound sterling by 37.9% and the Indian rupee by 38.6%.
Licensed Commercial Banks (LCBs) operating in Sri Lanka have recorded a significant increase in foreign remittances to the banks, following the announcement by the Central Bank of Sri Lanka (CBSL) on 7 March to lift the cap of Rs. 203 imposed on the US Dollar.
A senior official of Bank of Ceylon (BOC) revealed that the decision by the CBSL was effective as there had been a significant rise in the number of foreign workers now sending their money through BOC accounts.
“Rather than keeping the exchange rate at the Rs. 203 level, expatriates are happy to send their money through the formal channel for the high rate of Rs. 320 to Rs. 348. Compared to February 2022, we have a significant improvement,” the official added.
However, the official did not wish to disclose the percentage increase or reveal any statistical data due to competitor-related confidentiality.
Further, he highlighted that the only negative factor still hindering the operation to its fullest potential in receiving worker remittances was the operation of the kerb market, which was still offering a higher rate than the LCBs operating in the country.
The official optimistically stated: “With the rate of remittances we are receiving by now, we will be able to recover our lost foreign remittances income in the next few months. Thus, this move by CBSL is very good and we are very happy with the results. Moreover, we are now in the process of intensifying our promotional campaign to attract more remittances.”
Sampath Bank senior manager stated that there had been a significant increase in worker remittances coming into the bank since last week.
“Another official from Hatton National Bank, who wished to remain unidentified, stated that there has been an increase of 200% in foreign remittances received by the bank.
Meanwhile, an official from the CBSL’s Foreign Remittance Facilitation Department speaking on the condition of anonymity stated that it was too early to comment as the local banks were yet to update the CBSL with the finalised statistical report.
The CBSL fixed the exchange rate at Rs. 203 for over six months from early September 2021, before finally giving up its attempt to hold the exchange rate on 7 March 2022.
Making an announcement on 7 March, the CBSL noted: “Greater flexibility in the exchange rate will be allowed to the markets with immediate effect. The Central Bank is also of the view that forex transactions will take place at levels that are not more than Rs. 230 per US Dollar in the long run. .”
