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Sri Lanka buys US$48mn from forex markets in Oct

ECONOMYNEXT – Sri Lanka’s central bank has bought 49 million US dollars from foreign markets in October 2020 to maintain a pegged exchange rate and prevent its appreciation, while selling 1.5 million dollars to keep the rupee from falling, official data show.

In September the central bank bought 56 million dollars and sold 1.25 million dollars to maintain the peg at around 184/85 to the US dollar.

Sri Lanka has injected liquidity large volumes of cash into money markets but domestic credit has been weak or negative, though credit started to pick up in September and October.

Consumption had been weak amid Coronavirus controls and weak credit, while some imports are banned.

In August the central bank bought 121 million dollars from forex markets. Inflows and outflows into the government are not reflected in the data.

In October a billion US dollar sovereign bond was settled, in part with monetary reserves.

Sri Lanka’s gross official reserves, which also includes fiscal reserves, dropped to 5,858 million US dollars in November 2020 from 6,666.3 million a month earlier.

Sri Lanka’s central bank has borrowed 400 million dollars from the Reserve Bank of India shore up central bank reserves. (Colombo/Nov16/2020)

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