ECONOMYNEXT – Sri Lanka’s forex reserves grew 185 million US dollars in the month of the August 2019 to 8,532.6 million US dollars, official data showed.
Sri Lanka’s gross official reserves are made up of balances of both the central bank and the Treasury.
Fiscal balances, which are function of debt raising and settlement, can go down or up without affecting monetary stability.
Sri Lanka’s central bank reserves have also been growing steadily with inflows being mopped up with complementary monetary and exchange rate policies up to July 2019, after bottoming out in January 2019.
Liquidity management was however disrupted in August as the complementary monetary policy reversed.
In July the central bank bought 128 million US dollars from commercial banks. August data has not yet been released.
Liquidity injections began on August 07, apparently to push a down call money rate.
Sri Lanka’s private credit was negative in July, the month for which the latest data was released, though there was positive growth in June.
Government borrowings have picked up in both June and July. However the ceiling policy rate was cut on August 23 by 50 basis points and the call money rates was pushed down with liquidity injections.