Sri Lanka forex reserves rise to US$7.0bn in September

Sept 25, 2013 (LBO) – Sri Lanka’s forex reserves rose to 7.0 billion US dollars by September 23, 2013 up from 6.3 billion in July, boosted by capital inflows, the Central Bank said. Sri Lanka’s state-run National Savings Bank raised 750 million US dollars in September.

In money market excess rupee reserves of banks rose to 80 billion rupees, as a result of the Central Bank releasing fresh rupees to the economy by purchasing dollars.

The loan will boost imports and expand the trade deficit as the money is loaned out and the recipients, including the state, spend it.

In July imports surged after liquidity was released to the banking system through a reserve ratio cut by the Central Bank.

In the first seven months of the year 128.8 million US dollars had flowed into equity markets with the total reaching 150 million US dollars by September 23.

In July there had been a net inflow into rupee gilt markets of 45.9 million US dollars, reversing a 27.4 million dollar outflows in June.

By September 23, inflows to government securities markets was 493 million US dollars while outstanding foreign holdings of rupee gilts had risen to 3.6 billion US dollars, higher than a 12.5 percent ceiling, the Central Bank said.