SRI LANKA: Central Bank Lifts Ban on Forward Forex Sales to Importers

The Central Bank of Sri Lanka (CBSL) has ended its ban on forward foreign exchange transactions in Banking Act Direction No. 1 of 2022 issued on 22 March 2022. The ban had prevented banks from providing facilities for the forward sale and purchase of foreign exchange to importers and their counterparties. 

The CBSL had previously restricted forward transactions and swaps to within-bank transactions in its Banking Act Direction No. 7 of 2021, issued on 25 April 2021. Commercial banks were not allowed to enter into such contracts with corporate clients that had a value date beyond the spot date, except for certain specified exceptions such as hedging foreign exchange exposures on foreign currency loans, or on forward or swap transactions with another bank acting on its own behalf.