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Sunday, October 18 2026
Sunday, October 18 2026
MONETABRIEF – Sri Lanka's foreign exchange inflows made up of exports, remittances and tourism exceeded imports by 625 million dollars in August as private credit eased for two months in a row, official data showed.
Imports fell to 1,913 million US dollars in August from 2,251 million dollars in July, as private credit expansion eased for two months in a row, from 245 billion rupees in June to 169 billion and 105 billion in August, central bank data showed.
Investment goods and base-metals fell to 489 million US dollars from 589 million in July.
Total inflows made up of exports, remittances, and gross services including tourism was ,539 million US dollars, exceeding imports by 625 million dollars.
Sri Lanka's central bank bought 579 million US dollars from market in August only allowing marginal appreciation as credit expansion slowed down.
The appreciation led to selling by exporters, cutting net open positions by banks, reversing excess liquidity driven speculative and hedging positions earlier in the year.
The rupee collapsed in 2026 to 330 to the US dollar from 309 as the central bank dishonored its note – issue pushing up inflation and amplifying the effects of a war in the Middle East.
The rupee also depreciated from 300 to 309 to the US dollar over 2025 as the central bank also systematically debased the rupee, buy over-purchasing dollars and building up excess liquidity.
The central bank can build up excess liquidity to suppress rates by reserve collections (reserve collections should lead to a rise in rates), and then refuse to return the dollars to the people (dishonor the note issue) when imports are made with the liquidity.
There have been calls to allow the Treasury to buy dollars to repay debt which can be done as a reserve money neutral transaction, which does not expand money supply (the note-issue).
Excess liquidity has again gone up in the money markets, giving an opportunity for the central bank to debase the currency under the doctrine of 'flexible exchange rate' when private credit picks up eventually. (Colombo/Sept18/2026)
| 3 month bill | 9.26% | 1bp ▲ |
| 12-m bill | 9.95% | 2bp - |
| Gold (Ounce) | $4187 | - ▼ |
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