23 March 2023 06:06 am Views - 3736
The Central Bank is continuing to preserve its position as a net buyer of foreign currency from the domestic foreign currency market, with the dollar liquidity conditions started easing from around early this year, following debt standstill, lower tepid imports and increased dollar inflows.
The Central Bank in February bought US $ 287.0 million in foreign currency and sold US $ 33.4 million, remaining a net purchaser of foreign currency so far this year.
In January too, the Central Bank bought US $ 348.8 million and sold US $ 137.6 million.
Meanwhile, although no official data is available yet, the Central Bank has bought dollars to the tune of US $ 500 million since the surrender rule in place for the exporters was initially relaxed and done away a week later.
In the first week itself, since the rule was relaxed from 25 percent to 10 percent, the Central Bank had bought US $ 308 million, the most for any five-day period.
“We have now bought around US $ 500 million,” told Central Bank Economic Research Director Dr. P.K.G. Harischandra, joining in a television talk show a couple of weeks ago.
So far for this year, he said the Central Bank had bought about a billion dollars of foreign currency from the market.
He told the rupee appreciation began with the relaxing of the surrender rule and if they didn’t buy the dollars, the rupee would’ve appreciated even more.
The statement approving Sri Lanka’s Extended Fund Facility (EFF) by the International Monetary Fund (IMF) this week said the Central Bank aims to buy up to US $ 1.4 billion from the market and rebuild the external reserves to US $ 4.4 billion by the end of the year. By the end of February, Sri Lanka had external reserves of US $ 2.2 billion.
Sri Lanka is expected to get a 10-year time horizon to settle its bilateral creditors as part of the debt assurances the country received during the last couple of months.
This provides Sri Lanka a once in a lifetime opportunity to rebuild its external reserves to well beyond US $ 10 billion by the end of next year. The President’s Office said up to US $ 7.0 billion worth of foreign assistance could follow the IMF Board approval for the EFF this month.