Official reserves up to USD 4.5 Bn by end Jan.
Gross official reserves (GOR) continued to improve to US dollars 4.5 billion by the end of January 2024 according to the Central Bank.
This included the swap facility from the People’s Bank of China (PBOC), equivalent to around US dollars 1.4 billion, which is subject to conditionalities on usability. The increase in the GOR was mainly due to the substantial net purchases of foreign exchange from the domestic market by the Central Bank. Overall, the Central Bank purchased US dollars 245 million, on a net basis, during January 2024.
Workers’ remittances too recorded an improvement in January 2024, compared to the corresponding period of the previous year.
The appreciation trend of the exchange rate that was observed since the latter part of December continued thus far in 2024. The Sri Lanka rupee appreciated by 4.4 per cent against the US dollar during the year up to 29 February 2024.
Workers’ remittances amounted to US dollars 488 million in January 2024, in comparison to US dollars 437 million in January 2023 and US dollars 570 million in December 2023. Workers’ remittances continued to record a broad-based increasing trend, despite intermittent seasonal fluctuations, since recording a notable recovery in 2022
Meanwhile, reflecting the cross-currency movements, the Sri Lanka rupee appreciated against other major currencies, such as the euro, the pound sterling, the Japanese yen, the Indian rupee and the Australian dollar during the year up to 29 February 2024.
In line with the nominal appreciation, the real effective exchange rate (REER 24) also appreciated during January 2024. Meanwhile, the deficit in the merchandise trade account widened to US dollars 541 million in January 2024 from US dollars 445 million recorded in January 2023, mainly with a higher increase in imports. In addition, the trade deficit in January 2024 widened compared to the deficit of US dollars 487 million in December 2023.
Concerning services trade, notable inflows were observed in January 2024 into sea transport, air transport, and computer and IT/BPO-related services compared to January 2023. Meanwhile, major outflows were recorded in the form of air transport, sea transport, and management and consulting services. Foreign investments in the government securities market recorded a net outflow in January 2024.
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