Sri Lanka to negotiate US$500mn in central bank swaps

Jan 03, 2012 (LBO) – Sri Lanka is planning to negotiate up to 500 million dollars in swaps with other central banks to bolster the island’s external position, Central Bank Governor Nivard Cabraal said. From August the Central Bank started to sterilize forex sales as interbank markets ran out of liquidity.

“All the swaps will be reaching about 500 million dollars this year,” Governor Cabraal said.

“We need a little bit of buffer or a cushion. We do not really need to use it.”

Sri Lanka already has a 200 million US dollars swap facility with Bank Negara Malaysia.

Sri Lanka’s reserves fell 6.0 billion rupees by end 2011 from a high of 8.0 billion rupees in July amid strong credit growth and interventions.