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Inflows in the capital account however trigger imports as the money is invested and or consumed and economic activity picks up. FDI inflows in particular require capital imports.
Imports had increased in June, partly due to the import of some one-off items, the Central Bank said.
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Meanwhile remittance inflows have been strong. Remittances (exports of labour), also trigger imports and is a key cause of Sri Lanka's trade deficit.
A stronger import performance can be a sign of higher economic activity, and in the absence of any central bank accommodation (printing money) it is not a danger to the exchange rate or foreign reserves.
Update IV/wrap The Central Bank said inflation fell to 6.1 percent in July from 6.8 percent in June a