Sri Lanka gross official reserves improved to USD9.9bn by end April

May 11, 2018 (LBO) –  Sri Lanka’s gross official reserve position had improved to 9.9 billion US dollars by end April, the record highest level in history with the successful issuance of the international sovereign bond in April and foreign exchange purchases by the Central Bank from the domestic market.

So far during the year, the exchange rate had depreciated against the US dollar by 3.1 percent. Much of this depreciation came in late April and early May, reflecting the US dollar’s broad-based strengthening in global markets.

The Central Bank said it intervened in the domestic foreign exchange market to mitigate excessive volatility in the exchange rate, and the rupee has shown signs of stabilisation.

Exports have maintained the positive momentum with export earnings growing during the first two months of 2018.

However, this was outweighed by the increase in import expenditure, largely driven by gold and vehicle imports, which resulted in a widening of the trade deficit.

The Central Bank said the imposition of the Customs duty on gold imports is expected to help narrow the trade deficit to some extent.

Earnings from tourism and workers’ remittances continued their growth performance so far during the year.

On account of tightening global financial conditions, the rupee denominated government securities market experienced a net outflow while the Colombo Stock Exchange (CSE) attracted net inflows so far during the year.

Amidst these developments, the Central Bank has recorded a net foreign exchange absorption of US dollars 458.5 million from the domestic market in 2018 up to end April.