Rupee remains stable against US dollar
The merchandise trade deficit widened in August 2023 compared to a year ago led by higher decline in export earnings than the decline in import expenditure.
However, both export earnings and import expenditure increased compared to July 2023. In August 2023, foreign investment in the government securities market recorded a net outflow, while foreign investment to the Colombo Stock Exchange recorded a net foreign inflow in August 2023. Gross Official Reserves were estimated at US dollars 3.6 billion by end August 2023. This included the swap facility from the People’s Bank of China, equivalent to around US dollars 1.35 billion, which is subject to conditionalities onusability.
The Central Bank supplied US dollars 171 million to the domestic foreign exchange market on a net basis during the month. Overall, the Central Bank has purchased around US dollars 1.5 billion, on net basis, during January to August 2023. The Sri Lanka rupee remained broadly stable against the US dollar in August 2023.
Earnings from exports in August 2023 marked the highest monthly earnings so far in 2023.
However, earnings from merchandise exports declined by 8.7 % in August 2023, year- on-year, to US dollars 1,119 million.
Expenditure on the importation of consumer goods increased in August 2023, compared to a year earlier, driven by the increases in expenditure on both food and non-food consumer goods. Expenditure on non-food consumer goods increased mainly due to telecommunication devices primarily mobile phones), medical and pharmaceuticals and household and furniture items.