Nov 23, 2010 (LBO) - Sri Lankan individuals and unlisted firms will be allowed to buy foreign listed stocks for up to 100,000 US dollars a year and listed companies could buy up to 500,000 dollars worth a year, Central Bank Governor Nivard Cabraal said.
They can invest in equity and also set up places of business or branch offices," Cabraal told reporters.
"They do not have to come to the Central Bank. Anything above this limit will require Central Bank permission.
"But up to these limits, foreign exchange dealers (banks) can allow equity purchases. It will be like getting foreign exchange for travel or education abroad."
Cabraal said the Central Bank was sitting on nearly 7.0 billion US dollars of foreign reserves, which allowed the central bank to loosen forex controls.
Sri Lanka slapped foreign exchange controls in 1952, after a money printing, pegged exchange rate central bank was set up abolishing a currency board arrangement that kept the country's inflation low under colonial rule.
A central bank that prints money has to allow the exchange rate to float, or impose exchange controls to continue printing to finance deficits.
The central bank is also allowing local firms to sell debentures to foreign buyers.
source - www.lbo.lk
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