Sri Lanka’s foreign exchange reserves continued to fall this month as the political crisis in Colombo continues.
Forex reserves reportedly fell by 884.9 million US dollars in November 2018, to 7,018.38 million dollars, though the data does not include forex reserves released through swap agreements to maintain a peg or transactions with the Treasury.
The latest fall comes amidst measures taken by the Central Bank of Sri Lanka including cutting the statutory reserve ratio and injecting an estimated 90 billion rupees of cash at zero interest rate into the banking system.
Economy Next reported:
“Sri Lanka's credit system is vulnerable to balance of payments crises, as the central bank tries to maintain artificially low interest rates whenever the economy recovers and credit demand picks up, while operating soft-peg with the US dollar and collecting forex reserves”.
See more from Economy Next here.