The Central Bank has taken measures to limit the high demand for foreign exchange as a measure to reduce the trade deficit and strengthen gross reserves.

The acting Director of the Economic Research Department of the Central Bank Swarna Gunaratne said that restrictions have been imposed on forward purchase agreements between the commercial banks and the business sectors.

The Bank has limited the forward purchase agreements to a maximum of 90 days.

Under forward purchase agreements the commercial establishment can purchase goods at a future date on the current exchange rate.

Also the Bank has reduced the ceilings imposed on the commercial banks for foreign exchange dealings by two thirds.

The measures will be effective from the 1st of this month.

These measures will reduce the foreign exchange demand, the Bank official said.