Official foreign exchange absorption by Sri Lanka's monetary authority surged during July following recent currency market stabilization efforts.
Official data reveals that the Central Bank of Sri Lanka (CBSL) bought a net USD 348.6 million from the domestic market in July after the local rupee recovered from hitting a four year low earlier in May.
THE CBSL completely refrained from selling greenbacks in July after having sold over USD 211 million on a net basis during May, which marked the first net outflow intervention in 22 months.
Net foreign currency purchases by the Central Bank have now accumulated to USD 905 million across the first seven months of 2026, building upon net purchases of USD 2 billion recorded during the previous year.
The sharp downward pressure on the rupee during May stemmed from an unusually high national fuel import bill linked to Middle Eastern geopolitical escalations, coupled with persistent dollar demand for vehicle imports.
Central Bank officials maintained an aggressive dollar purchasing strategy to bolster national foreign currency reserves in alignment with structural targets set under the country's USD 3 billion IMF Extended Fund Facility.
These accumulated foreign reserves are crucial for fulfilling debt service commitments on multilateral and bilateral loans while paving the way for foreign debt repayments owed to international sovereign bond holders in April 2028.
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