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Sri Lanka forex reserves marginally down in April to US$5.0bn

ECONOMYNEXT – Sri Lanka’s official foreign reserves fell $71 million from a month earlier to $5,045 million in April 2017, official data show. 

Sri Lanka had been losing forex reserves steadily after printed money in 2015 and 2016 to drive state and private credit to unsustainable levels and foreign investors panicked and started to pull out funds.

Although Sri Lanka is having a programme with the IMF, in January, tens of billions of rupees were printed to repay a maturing rupee bond in a strategy that has become the latest danger to economic and monetary stability.

In took almost two months for the Central Bank to pull back the printed money.

In February, the Central Bank sold $297 million to defend the currency, but also bought $146 million from commercial banks.

In March, the Central Bank bought $192 million from banks and sold only $13 million. Data does not include sales and purchases from the government.

April forex deals with banks have not been released. In April, the Central Bank printed money to finance seasonal demand for cash, but it is usually able to also collect dollars from remittances and dollar conversions from export firms that pay salary advances. (Colombo/May08/2017)

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