Official reserves top US$ 2 billion not counting Chinese swap

By Sanath Nanayakkare

The country’s reserve buffer has topped US$ 2 billion without counting the Chinese swap, according to the numbers of gross official reserves given in the Weekly Economic Indicators of the Central Bank of Sri Lanka.The report stated that the gross official reserves were provisionally estimated at US dollars 3,562 million as at end October 2023 including the People’s Bank of China (PBOC) swap equivalent to around US dollars 1.4 bn, which is subject to conditionalities on usability.

The report further stated:

“During the year up to 10th November 2023, the Sri Lanka rupee appreciated against the US dollar by 10.5 per cent. Given the cross currency exchange rate movements, the Sri Lanka rupee appreciated against the Japanese yen by 26.1 per cent, the pound sterling by 8.9 per cent, the Euro by 10.4 per cent and the Indian rupee by 11.2 per cent during this period,” it noted.

“Weekly Average Weighted Prime Lending Rate (AWPR) for the week ending 10th November 2023 decreased by 57 bps to 13.31 per cent compared to the previous week.”

“The reserve money decreased compared to the previous week mainly due to the decrease in the deposits held by the commercial banks with the Central Bank.”

“The total outstanding market liquidity was a surplus of Rs. 23.490 bn by 10th November 2023, compared to a surplus of Rs. 35.508 bn by the end of last week.”

During the height of the economic crisis in mid- 2022, concerns were raised at many economic forums as to why Sri Lanka had negotiated for the Chinese swap which was subject to conditionalities on usability. Even when the country’s reserves had pathetically declined to about US$ 20 million, Sri Lanka was not able to make use of this swap.