CB set to end 2023 as net purchaser of foreign currency

• The cumulative net absorption of foreign currency at US$ 1.8bn and December saw multiple inflows surpassing US$ 780mn

The Central Bank is poised to conclude 2023 as a net buyer of foreign currency from the domestic foreign exchange market, reclaiming a substantial portion of the foreign currency reserves lost in the past couple of years, marking a significant turnaround for both the external sector and the overall economy.
According to the latest available data, the Central Bank continued its trend of being a net purchaser in the local foreign exchange market, acquiring US$ 117 million in November without any sales. 

This extends the record for the third consecutive month, following September and October, during which the Central Bank purchased US$ 83 million and US$ 108 million, respectively.
The cumulative net absorption of foreign currency by the Central Bank over the eleven months has reached US$1,782.87 million. Although December figures are pending, it is expected to maintain the trend, extending the recent record of the Central Bank remaining a net absorber of foreign exchange.

During the eleven months, only in three months from June through August, the Central Bank turned a net seller of foreign currency.  

The Central Bank has been successful in addressing the balance of payment (BoP) crisis, which plunged the economy into its worst crisis last year, and the runway inflation which reached almost 70 percent last year.
Although prices still remain sharply elevated, inflation has returned to around 3.0 percent levels. 
The suspension of repayment of most types of foreign currency debt, solid recovery seen in both remittances and tourism sector and the multilateral inflows the country has been receiving since unlocking the International Monetary Fund (IMF) programme early this year have helped the Central Bank to turn itself into a net purchaser of foreign currency this year.

In fact the trend first began from the latter part of last year as the outflows were largely muted due to a combination of policies aimed at clamping down on demand conditions and thereby the imports.  
These positive conditions helped the Central Bank to rebuild its foreign currency reserves to US$ 3,584 million by the end of November and with roughly US$ 787 million received this month from the IMF and other multilateral agencies, the officials expect the reserves to exceed the US$ 4.0 billion level by the close of this year. 
Total foreign currency reserves contain US$ 1.4 billion equivalent Yuan denominated swap line from China which has limitations on its usability.