Sri Lanka forex reserves drop to US$5.3bn in June 2016

ECONOMYNEXT – Sri Lanka’s forex reserves dropped to 5.3 billion US dollars in June 2016 down 348 million dollars from 5.62 billion US dollars in May with a 700 million dollar repayment of a swap to India, official data showed.

Forex reserves without Indian swaps rose to 4,852 million dollars from 4,520.7 million dollars. Sri Lanka still owes the RBI another 400 million dollars from another swap.

June reserves were also boosted by a 168 million dollar disbursement from a Extended Fund Facility loan from the International Monetary Fund.

Central Bank officials have said that the monetary authority was able to purchase dollars in June from the market. Some dollars were also acquired through swaps from banks.

Sri Lanka’s monetary policy has been slightly tighter in June compared to the period since the balance of payments crisis began in 2015, with money markets being kept short instead of plus liquidity by the central bank, after interventions.

In the first week of July however large volumes of liquidity had been injected to money markets, which points to continued reserve outflows.

The central bank’s Treasury bill stock had risen to 288 billion rupees in July 07 from around 240 billion levels for most of June.

 

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