Sri Lanka’s Central Bank Governor, Nandalal Weerasinghe, expressed confidence in the stability of the country’s rupee, citing current data. He reassured reporters that future exchange rate fluctuations were unlikely to be significant, pointing to foreign incomes and payments. Governor Weerasinghe emphasized the bank’s commitment to market-driven rates, with intervention capabilities if volatility escalates. With a substantial reserve of 5.4 billion US dollars, the bank aims to maintain stability while allowing market dynamics to guide currency values.
Highlighting recent developments, Sri Lanka’s gross foreign reserves reached a 3.5-year high in April, signaling economic resilience. The governor anticipated a positive impact from ongoing debt restructuring, anticipating resumed aid and improved debt servicing conditions. Last year’s repayment of 2.5 billion US dollars demonstrated the country’s commitment to managing its debt obligations responsibly.
The rupee’s recent appreciation against the US dollar, from 370 to around 300 since March 2022, reflects policy adjustments, including the end of compulsory dollar sales by banks. The Central Bank strategically reduced Treasury bills while injecting dollars into the market, fostering a balance of payments surplus. This surplus, coupled with controlled private credit and state enterprise profits, contributes to improved budget deficits and overall economic stability.