Sri Lanka lowers amount of foreign currency people can hold

COLOMBO, Sri Lanka (AP) — Sri Lanka will lower the amount of foreign currency that individuals can hold to $10,000 from $15,000, and penalize anyone who holds foreign currency for more than three months by making it against the law, the island nation’s central bank chief announced Thursday amid the worst economic crisis in recent memory.

Central Bank Governor Nandalal Weerasinghe told reporters that people are requested to deposit excess foreign currency in a bank or convert it into local currency within two weeks of his announcement. After that time, central bank officials together with police will carry out raids, he said, adding that anyone found violating the new rules will be fined.

The move, which will be implemented under the country’s foreign exchange act, comes amid a severe shortage of foreign currency that has resulted in difficulties in paying for the import of essentials such as fuel, cooking gas, medicine and food.

For several months, Sri Lankans have endured long lines to buy those essentials, most of which come from abroad. Shortages of hard currency have also hindered imports of raw materials for manufacturing and worsened inflation.

Protesters were blocking main roads to demand gas and fuel, and local television channels showed people in some areas fighting each other over gas and fuel.

Weerasinghe said black-market premiums have led people to collect foreign currency bank notes and keep them at home or in vaults.

Police recently raided two unspecified places that had foreign currency notes and seized $40,000 and 50,000 euros.

The Indian Ocean island nation is on the brink of bankruptcy and has suspended payments on its foreign loans. Its economic woes have brought on a political crisis, with the government facing widespread protests.

Sri Lanka has...