Sri Lanka ends 2019 with US$7.6bn in forex reserves
ECONOMYNEXT – Sri Lanka has ended 2019 with 7,638 million US dollars of forex reserves in December 2019 below initial targets, despite weak credit slowing imports, with monetary policy reversing from around July, official data showed.
But the reserves were up from 6.9 billion recorded on December 2019.
Sri Lanka’s gross official reserves are made up of monetary reserves of the central bank, collected by pegging the currency to the US dollar and dollar balances of the Treasury raised or kept to repay foreign loans.
A pegged central bank can collect forex reserves steadily by selling down domestic assets to squeeze the external current account as long as liquidity injections are not made.
Sri Lanka was initially expecting to end 2019 with 8.2 billion US dollars, but monetary policy reversed from around July, with liquidity injections beginning the next month.
However in November the central bank bought US dollars.
Central Bank Governor Indrajit Coomaraswamy said under the worst case he expected Sri Lanka to end up with at least 6.9 billion US dollars in reserves. (Colombo/Jan11/2020)