Gross forex reserves up to USD 1.9 bn. at year-end

Sri Lanka closed 2022 in December with gross forex reserves of 1,896 million dollars, up from 1,804 million US dollars a month earlier amid high interest rates which has allowed the central bank to halt money printing, reports said.

Gross reserves were largely unchanged after rates were hiked in April and India stopped deferring import payments through the Asian Clearing Union.

Sri Lanka began 2022 with gross reserves of 3.1 billion US dollars but continue to print money to maintain an artificially low policy rate, making it impossible to maintain an exchange rate peg at 200 to the US dollar, analysts said. The country ran out of foreign reserves around March 2022 but was able to continue interventions with printed money triggering demand.

External stability has largely been reached though there is yet no total confidence among market participants to peg the rupee at 360/370 to the US dollar. (Economy Next)