Sri Lanka gross official reserves improve to USD 9.2 bn by end June

July 06, 2018 (LBO) – Sri Lanka’s gross official reserve position is estimated to have improved to around 9.2 billion US dollars by end June 2018, compared to 8.0 billion dollars at end 2017.

The reserves include international sovereign bond issued in April, the receipt of the fifth tranche from the IMF, receipts from the divestiture of the Hambantota port and foreign exchange purchases of the Central Bank from the domestic market in early 2018.

The Central Bank recorded a net foreign exchange absorption of 141 million dollars from the domestic market in the first half of 2018.

So far during the year, the Sri Lankan rupee has depreciated against the US dollar by 3.6 percent.

“Much of this depreciation was recorded since late April, reflecting the broad-based strengthening of the US dollar in the international market,” the Central Bank said.

“The Central Bank intervened in the domestic foreign exchange market to address speculative behavior in the foreign exchange market and the unwarranted volatility in the exchange rate.”

The Central Bank said interest rates remain high both in nominal and real terms, while growth in money supply decelerated.

“Appropriate open market operations will address short-term liquidity concerns,” the Central Bank said.

“It is expected that nominal and real interest rates would gradually adjust downwards in line with the neutral policy stance of the Central Bank and the prevailing low inflation environment.”