Sri Lanka forex reserves fall

Dec 23, 2010 (LBO) – Remittances by migrant Sri Lankan workers rose 22 percent in the first 10 months of 2010 but foreign reserves have fallen slightly after central bank dollar sales, latest data showed. “During the first ten months of 2010, workers’ remittances increased by 21.9 percent to 3,380 million US dollars after adjusting for revisions by commercial banks over that of the corresponding period of 2009,” the central bank said in a statement.

“The gross official reserves continued to remain significantly above the targeted level and stood at 6.6 billion US dollars by end-November, 2010 without Asian Clearing Union (ACU) funds.”

Based on the previous 12 months’ average expenditure on imports of 1,084 million US dollars a month, the gross official reserves, without ACU funds, were equivalent to 6.1 months of imports, the central bank said.

Foreign exchange reserves had been 6.7 billion dollars at end-October 2010, enough for about 6.3 months of imports.

Forex reserves hit nearly seven billion dollars in mid-November, in excess of the target set by the central bank which then loosened forex controls.

The central bank has been has been selling dollars in the past three months to maintain a peg with the US dollar.

It sold 89.05 million US dollars in November. In September the central bank bought 37.05 million US dollars in forex markets and sold 106.6 million. In October sales increased to 324.2 million US dollars while purchases were 35.5 million US dollars.

The central bank has been holding the rupee at around 112.00 to the dollar this year, the highest since December 2008, when the country was in the midst of a balance of payments crisis.