Gross official reserves surpass USD 3 bln by end of May 2023

The level of gross official reserves is estimated to have surpassed USD 3 billion as of 31 May 2023, the Central Bank of Sri Lanka (CBSL) says.

This includes the swap facility from the People Bank of China, equivalent to around USD 1.4 billion, which is subject to conditionalities on usability.

In its latest Monetary Policy Review, the Central Bank said it has absorbed a sizeable amount of foreign exchange from the domestic forex market thus far in 2023, resulting in a steady increase in gross official reserves.

The renewed foreign investor appetite for short-term government securities has also helped improve forex liquidity in the recent months.

The exchange rate, which is allowed to be determined by market forces, continues to reflect positive market sentiments underpinned by the improvement in liquidity in the domestic forex market.

Reflecting the improved balance of payments (BOP) conditions, the Central Bank said it relaxed the cash margin deposit requirements imposed on selected imports in May 2023, and assured that further measures would be initiated to loosen capital flow restrictions in the period ahead.