SL expat employees more resolved to withhold dollars
Sri Lankan expatriate workers are even more determined to withhold foreign exchange earnings in their respective countries of residence moving to the latest dollar surrender rule by the Central Bank (CB).
Some workers employed in West Asia told the Business Times that now they have resorted to using e-commerce for most of their transactions in Sri Lanka. They pay utility bills, buy groceries, pay children’s school fees, and execute many other transactions via e-commerce.” This is hassle-free and we do not lose on the exchange rate,” a banker working in Dubai told the Business Times.
This comes in the wake of the CB issuing new directives recently increasing the 10 per cent rule on dollar remittance sales instructing licensed banks to sell 25 per cent of the foreign exchange inflows they receive through workers’ remittances and export proceed residuals to the CB to strengthen the dollar reserves. On Wednesday, the CB said it had reached the end 2021 target of $3.1 billion in foreign reserves but failed to disclose the sources of these inflows. Informed sources said it included a currency swap with China (worth $1.5 billion) signed in March but which has to be used to purchase goods from China only.
A quantity surveyor working in Qatar told the Business Times that his local bank has sent a letter saying that using unauthorised channels to remit money to Sri Lanka is an offence and explained certain incentives for remitting money through the bank. However this hasn’t deterred many of them from using underground channels to send money. “We will still be losing the exchange rate if we go through the banking channels to remit money to Sri Lanka as in the unofficial market it is Rs.240 to a US dollar whereas at times we get less than Rs. 200 for each dollar through the banking system,” he explained. He said that many in his team from Sri Lanka are using e-commerce for most transactions.
Migrant workers are also resorting to e-commerce for certain transactions like utility bill payments, a local banker said. All of them have smartphones and most of them are technology savvy, he said pointing out that when it is about losing their hard-earned money anyone will resort to easier and cheaper ways of transacting. “There doesn’t seem any way out of this for some time. For a good few months of this year trends of withholding dollars overseas by migrant workers will continue.”
Sri Lanka has been struggling with its foreign reserve situation exacerbated by the exchange crisis over the past year. This year both the US$ and the government have been actively chasing avenues to restock official reserves by encouraging non-debt flows so that the existing foreign debt could be managed sustainably. but the progress has been very slow.
A senior banker pointed out that the real exchange rate in the market has gone so far beyond that last week and it was traded at Rs. 250 to a US dollar. “The rupee is so devalued that there is much speculation in the industry about the CB issuing a new Rs. 10,000 note this year.”
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