Foreign reserves to soar to US$ 11 bn

CBSL TO CONTAIN RUPEE DEPRECIATION :

Pressure on the currency is unwarranted:

The Central Bank said it has taken measures to contain the depreciation of the Rupee.

The underlying fundamentals do not warrant the current pressure on the Sri Lanka rupee. Gross external reserves are presently at a healthy USD 9.1 bn, while the real effective exchange rate indices indicate that the currency is competitive, the Central Bank said yesterday.

The pressure on the currency is, therefore, unwarranted.

The USD 250 mn as the next tranche of the IMF EFF in early June; the USD 585 mn as the final payment on the long lease of the Hambantota Port during the second week of June 2018; and the USD 1 bn as the proceeds of a syndicated term loan due in mid-June 2018 are expected to boost the current robust level of reserves in the coming weeks.

Gross external reserves are, therefore, expected to amount to a record close to US$ 11 bn by mid-June 2018.

While being committed to flexible exchange rate management, the CBSL has the option of using a part of its unprecedentedly large external reserves to trigger a material appreciation of the rupee to prevent unwarranted depreciation of the currency, particularly as it is not justified by the underlying fundamentals, the CBSL said in a press release.