Friday, August 7 2026
Friday, August 7 2026
MONETABRIEF – Foreign investors brought money to buy rupee bonds this week, continuing a recent trend market participants said, as authorities continued to buy dollars preventing appreciation at around 335.30 rupees to the US dollar in the spot market.
Appreciation allows more reserves to be collected as a recent destruction of financial capital in the island by macro-economists is reversed, analysts say.
Sri Lanka busted the rupee in the first quarter claiming there was an external shock, pushing up excess liquidity by monetizing the balance of payments and with fx swaps.
But when foreign buying resumed in a positive external shock, the appreciation is resisted, giving credence to observations that the central bank has a depreciation bias as well as an inflation bias.
Despite the demonstrable inflation and depreciation bias, the parliament has given the agency 'independence'.
The rupee was quoted around 335.45/55 to the US dollar in the spot market Friday despite selling in the market buy foreign bond holders to buy bonds earlier in the week.
Sri Lanka's monetary operating framework radically worsened after 2015 after the International Monetary Fund gave technical assistance to calculate a potential output and so-called mid-corridor targeting of rates started.
As rates were 'guided along the desired path' violating classical economic theory, a country without war hit repeated forex crises, and borrowed heavily to repay maturing debt as long a rating space existed.
In 2022 the country hit a typical Latin America style peacetime external default, that started after the IMF's Second Amendment to its articles that left many developing countries without a credible anchor for money. (Colombo/Aug07/2026)
| Sterling | 458.31 | Sell - |
| 3 month bill | 9.95 | 0.18 ▼ |
| 12-m bill | 10.20% | 0 - |
| Gold | $4035 | - - |
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