US$ 1.6B reserves wipeout to defend rupee
Posted on July 19th, 2015

By Paneetha Ameresekere Courtesy The  Ceylon Today

Ceylon Finance Today: A massive sum of US$ 1,069.96 million (US$ 1.1 billion) was drained out from Central Bank of Sri Lanka’s (CBSL’s) foreign reserves in the first half of the year, mainly due to foreigners exiting from the government securities market and the stock market because of the prevailing political uncertainty in the country.
In contrast, in the corresponding period last year, the country’s foreign reserves on a net basis were enriched by US$ 550.9 million due to the receipt of inflows. Nevertheless, the drain in foreign reserves began in September 2014, when the calling of presidential elections was in the air. As a result, in the four month period from September 2014 to December 2014, the country’s foreign reserves suffered a net foreign outflow of US$ 516.19 million, thereby taking the net total of such outflows in the 10 month period to end June 2015 to US$ 1,586.15 million (US$ 1.6 billion).
Such outflows are caused due to CBSL’s prevention of the rupee depreciation, by meeting the market’s requirement for US dollars by selling the same at discounted price, whereas sellers were asking for higher prices.
The current discounted price of the dollar is Rs 133.80 per unit in interbank spot trades.

2 Responses to “US$ 1.6B reserves wipeout to defend rupee”

  1. Lorenzo Says:

    Another reason is central bank giving away its gold to TGTE.

    As promised, UNP has identified national gold reserves as partly “LTTE gold” allegedly taken from the LTTE in 2009. This is NOT true. But TGTE and UNP believe so. Now they have repatriated SL’s gold to TGTE. That is another reason for the DROP in foreign reserves.

  2. Independent Says:

    YES. We must listen to governor Lorenzo of Reserve Bank of TGTE .

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