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Sri Lanka expects US$7.5bn forex reserves by year-end: CB Governor

ECONOMYNEXT – Sri Lanka’s Central Bank Governor Indrajit Coomaraswamy said he expects foreign exchange reserves to grow to US$7.5 billion by end-2017, helped by inflows from syndicated loans.

Gross official reserves were estimated at US$ 5.6 billion at end-February 2017 compared to $6.0 billion at end-2016.

Coomaraswamy said current reserves amounted to less than three and a half months of imports and was not a “comfortable position.”

“We are operating on a thin margin and if there is some shock or volatility then there can be a crisis. That’s why we’re building up our reserves.”

This week’s central bank policy rate hike should help build reserves along with $1.5 billion expected from a sovereign bond.

Another $450 million is expected from a syndicated loan which could go up to $700 million or even $1 billion, Coomaraswamy said. 

But analysts say if the central bank is forced to print money to repay maturing bonds like in January, it will not be abe to collect reserves as outflows will exceed inflows.
(COLOMBO, March 24, 2017)

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