In the wake of unprecedented rupee depreciation for the first time in eight months, the Central Bank has taken measures to aggressively bring the rupee to 185 to the US dollar as the currency weakened towards 193 to the US dollar in forex markets in the wake of money printing. It is of the view that the recent increase in volatility of the exchange rate is unwarranted and unacceptable.
Accordingly, among other measures, the Central Bank will take appropriate action aggressively hereafter to contain this volatility in the domestic foreign exchange market.
The monetary authority expects that these actions, together with the continuation of the curtailment of non-essential imports, will enable the Rupee to appreciate within the next few days towards the levels of below LKR 185 per USD observed in November 2020.
The Central Bank reiterates that official reserves remain at sufficient levels. At present, gross official reserves are at USD 5.6 billion.
Discussions with the Central Bank’s domestic and foreign counterparts to boost the level of reserves are also reaching an advanced stage of conclusion.
The receipt of these expected inflows as well as the ongoing improvements in the domestic production economy leading to the expansion of foreign exchange earnings will facilitate the maintenance of exchange rate stability, while meeting Sri Lanka’s debt obligations on time, in the period ahead as well, the Central Bank announced.
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