Sri Lanka foreign reserves at US$7.42bn in February 2015

COLOMBO (EconomyNext) – Sri Lanka’s foreign reserves rose 167 million US dollars to 7,261 million US dollars in February 2015 from a month earlier, official data showed.
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The value of gold reserves dropped to 866 million US dollars from 902.9 million US dollars from a year earlier.
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Gold and commodity prices have been falling steadily with the US Federal Reserve ending its deadly money printing operations with economists with a classical bent saying a 1980s style low inflation period or Great Moderation 2.0 may be on the way.
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Sri Lanka’s foreign reserves had been pressured from the 9.2 billion US dollars reached in August 2014 as bank credit began to expand.
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Analysts have warned that foreign reserves will continue to be pressured due to a failure by the central bank to permanently sterilize over 300 billion US dollars of excess liquidity, repayments to the International Monetary Fund.
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Sri Lanka’s foreign reserves also suffer valuation losses in times of global monetary turmoil because substantial volumes are invested outside the US dollar assets, despite repeated warnings.
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The Central Bank has also made profit transfers in the past without building up a buffer to repay IMF loans.
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In January the government failed to sell a 1.5 billion US dollar sovereign bond as expected, and state spending has also been ratcheted up in a revised January 29 budget.
 

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