COLOMBO, Aug 7: The Srl Lankan government Tuesday announced that Srl Lankans would be allowed to buy gold from the central bank against the Sri Lankan Rupee with immediate effect, reports AFP.

"From today we are selling gold against the Rupee, earlier it was sold against foreign currency." central bank Governor Neville Karunatilleke told reporters here.

He said there was no restriction on the amount of gold that could be bought under the new measure which was mainly to help small jewellers and jewellery exporters.

"But individuals also can buy. We hope this will also reduce the volume of gold smuggling. "Karunatilleke said, ad-diting the government decision "makes Rupee gold convertible."

"We are moving very fast towards Rupee convertibility into other foreign currency. " the Governor said.

The central bank did not

say at what price the gold would be sold but a sovereign or eight grams (0.25 ounce) of gold costs 4.000 Rupees or approximately 100 Dollars in the open market.

He said the only limitation was that gold purchased against the Rupee could not be taken out of the country but admitted there was nothing to prevent people taking gold out of the country by "converting it to Jewellery."

Colombo last week announced it would allow private dealers to open gold sales outlets at the transit area of the main international airport here. Earlier only the central bank was authorised to make gold sales at the airport.

Meanwhile Karunatilleke said the strict monetary and fiscal measures introduced by the government had also brought down inflation from 19.6 per cent per annum in December 1990 to 11.6 per cent per annum in July 1991.

The continuing emphasis on monetary discipline undoubtedly will very soon bring down the rate of inflation well below the two digit level by the end of the year. Karunatilleke said.