CB says managing forex supply via swaps, purchases with banks

A notable depreciation pressure of 4.1% on the Sri Lankan rupee was observed during January, the Central Bank said yesterday but said remedial measures were being taken by managing forex supply with commercial banks.  

However, with the imposition of the temporary suspension of customer forward contracts of foreign exchange, the overall depreciation of the rupee was limited to 4.1% against the dollar in January. 

Moreover, the Central Bank’s active intervention in the domestic foreign exchange market through supply of foreign exchange and sell/buy swap with local commercial banks contributed to enhancing the foreign exchange liquidity in the market. 

The Central Bank supplied $ 72 million, on a net basis, to the domestic foreign exchange market in January. 

Overall, the rupee has recorded a depreciation of 4.9% against the dollar in 2021 up to 10 March. 

Meanwhile, reflecting cross-currency movements, the rupee depreciated against the euro, the pound sterling, the Australian dollar and the Indian rupee while appreciating against the Japanese yen during the same period.