December 10, 2019
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    July 08, 2018

    The Central Bank of Sri Lanka on Friday said Sri Lanka’s gross official reserve position is estimated to have improved to around US$ 9.2 billion by end June 2018, compared to US$ 8 billion at end 2017. Releasing the fourth Monetary Policy Review, in which the financial regulator decided to maintain policy interest rates at current levels, the Central Bank said it has recorded net foreign exchange absorption of US $141 million from the domestic market in the first half of 2018.

    “With the successful issuance of the International Sovereign Bond (ISB) in April 2018, the receipt of the fifth tranche of the Extended Fund Facility with the International Monetary Fund (IMF-EFF), receipts from the divestiture of the Hambantota port and foreign exchange purchases of the Central Bank from the domestic market in early 2018, the gross official reserve position is estimated to have improved to around US dollars 9.2 billion by end June 2018,” the Bank pointed out.

    Commenting on currency depreciation, the Central Bank noted that the Sri Lankan Rupee has depreciated against the US dollar by 3.6 per cent so far during the year with much of this depreciation recording since late April, reflecting the broad based strengthening of the US dollar in the international market.

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

    According to a recent report by CNBC, in comparison, emerging market currencies such as the Indian Rupee has declined by 8.22% year to date, Philippine Peso by 7.37%, Turkish Lira by 21.8% and Indonesian Rupiah by 5.37% against the US Dollar.

    Meanwhile, the Central Bank stated that there has been a moderation of earnings from exports alongside the increase in import expenditure resulting in an expansion of the trade deficit over the first four months of 2018.

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