Friday, 30 April 2021 10:26

CB extends suspension on buying ISBs by banks until further notice Featured

The Central Bank issued fresh instructions to the banks preventing them from purchasing Sri Lanka-issued International Sovereign Bonds (SLISBs) “until further notice”, ending the month-long stop-gap instructions issued thus far.

The instructions effectively prevent licensed commercial banks and National Savings Bank (NSB) from investing in SLISBs, which were seen accumulating billions of rupees worth of dollar bonds during last year, before the Central Bank struck on the practice by issuing a three-month suspension, effective from December 23, 2020.

 

As the three-month suspension expired, the Central Bank issued fresh instructions on April 9, extending the suspension through April 23. But the fresh direction issued last Friday, effectively ended the uncertainty surrounding as to what the Central Bank could do next.

 

This is among a string of measures brought in by the Central Bank since last year to minimise the pressure on the rupee, as banks accumulating dollar bonds add pressure on the currency as that entails large-scale outflows.

 

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