The Central Bank of Sri Lanka which last week decided to keep policy interest rates unchanged, says that in addition to the confidence gained from the Extended Fund Facility of the International Monetary Fund (IMF-EFF), increased investment inflows on account of government securities as well as other financial flows to the government, has helped to stabilise the domestic foreign exchange market.
Releasing the monthly Monetary Policy Review for September, the Bank noted that during the first eight months of the year, earnings from tourism increased by an estimated 16.0 per cent while workers’ remittances increased by 4.5 per cent during January-July 2016 strengthening the external position.

Reflecting these developments, gross official reserves were estimated to have improved to US dollars 6.6 billion by end August 2016, while the Sri Lankan rupee has recorded a marginal depreciation thus far during 2016, the Central Bank pointed out.

According to the Central Bank, the deficit in the trade account expanded marginally by 0.7 per cent, year-on-year, during the first seven months of 2016 as the decline in export earnings was greater than the contraction in the expenditure on imports.