CBSL purchases of forex from market at highest ever of $ 2.8 b in 2024

Thursday, 9 January 2025 03:00 - - {{hitsCtrl.values.hits}}

The Central Bank of Sri Lanka (CBSL) yesterday revealed that it purchased the highest-ever annual amount of foreign exchange from the domestic foreign exchange market in 2024, exceeding $ 2.8 billion (net).

It said gross official reserves increased to around $ 6.1 billion by the end of 2024 compared to

$ 4.4 billion at end 2023.

CBSL Governor Dr. Nandalal Weerasinghe, during the presentation of the CBSL’s Policy Agenda for 2025 and Beyond, said the external sector continued its positive momentum in 2024, building on renewed resilience in the sector. The Balance of Payments (BOP) position strengthened, and the current account is estimated to have recorded a surplus in 2024 as well, a record of two consecutive years of surpluses in Sri Lanka’s recent history.

As mandated by the Central Bank Act, the flexible exchange rate policy was continued in 2024, complementing the Flexible Inflation Targeting (FIT) framework. The Sri Lanka Rupee recorded an appreciation and demonstrated greater stability in 2024 as well, driven by net forex inflows and improved market sentiments.

Aligning with its mandate, Dr. Weerasinghe said the CBSL is committed to maintaining a market-determined and flexible exchange rate to serve as a buffer against external shocks, with interventions aimed at building up reserves and mitigating excessive volatility in the exchange rate.

“The CBSL strives to foster a deeper, transparent, and more liquid foreign exchange market and develop adequate systems for managing exchange rate risks, which includes the introduction of a benchmark spot exchange rate as a reflective rate to guide participants in the domestic foreign exchange markets as well as the general public,” the Governor added.

He recalled that the CBSL successfully operationalised the International Transactions Reporting System (ITRS) in 2023 and started publishing monthly statistics on trade in services, based on ITRS data from January 2024. This would enhance the accuracy and coverage of external sector statistics, thereby facilitating policy formulation to harness the potential of the country. “The CBSL plans to use the ITRS to improve the data quality and coverage of the financial account of the BOP, facilitating policy analysis and planning related to foreign exchange flows,” Dr. Weerasinghe added.