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Sri Lanka forex reserves drop to US$5.8bn after bond repayment

ECONOMYNEXT – Sri Lanka’s forex reserves dropped 807.8 million dollars in October 2020 to 5,578.5 million dollars as the island repaid sovereign bond, official data showed.

The drop is lower than the billion dollar sovereign bond that was paid back.

Up to September the central bank had also been purchasing dollars from forex markets amid weak credit and import controls.

There are also inflows to government, earnings on forex reserves and changes in the price of reserve assets including gold.

Gross official reserves included the central bank’s monetary reserves bought against domestic reserve money and fiscal reserves saved from inflows to the Treasury.

Some excess liquidity was also sucked up by the bond repayment.

Private credit has started to pick up, with large volumes of loans under moratorium, but in October the country was hit by an outbreak of Coronavirus.

Sri Lanka is due to receive an injection of around 700 million US dollar from China Development Bank to bolster reserves and repay loans falling due. (Colombo/Nov09/2020)

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