Sunday, July 26 2026
Sunday, July 26 2026
MONETABRIEF – Sri Lanka's central bank executed 2,045 million dollars of buy-sell swaps in 2025 and 1,442 million dollars of swaps matured, the monetary authority said in its annual report.
A total of 1,320 million dollar of swaps were rolled over.
As a result, outstanding buy-sell swaps increased by 603 million dollars to 1,921.3 million dollars by year end from 1,213.3 million at the beginning of the year on a value date basis.
"These swap transactions helped banks to manage their liquidity positions and cash flows, in both the FX market and the domestic money market and served for hedging requirements," the central bank said.
Central bank's money printing (generating) buy sell swaps are controversial as it allows the agency to serve its inflation bias by printing money and also depreciation bias by dishonoring the notes created against dollars creating hardships for people.
The buy sell swaps monetize the dollars deposits of banks (turn forex reserves into circulating medium) which the become imports and hit the balance of payments.
If the central bank dishonors the notes refusing to return the dollars when the money flows from the banks which swapped the dollars for central bank notes, if the rupee depreciates.
It also exposes the central bank to forex losses if the dollars in the underlying transaction were given to the Treasury.
If not, the central bank has to pay the swap cost to banks to show that it was gross reserves.
Amid public opposition to inflationary open market operations and outright purchase of government securities, the buy-sell swaps remain a key tool through which macro-economists can artificially depress rates, boost imports, reduce reserve building from outright purchases of dollars.
In the 2025 the rupee collapsed from 300 to 309 and in 2026 to 340 levels as the central bank failed to honor notes in had created through both swaps and dollar purchases from the public, using the 'flexible' exchange rate to escape accountability for the new notes. (Colombo/July25/2025)
| US Dollar | 340.98 | Sell - |
| Euro | 391.44 | Sell - |
| Japan Yen | 2.114 | Sell - |
| Sterling | 458.31 | Sell - |
| AED | 91.58 | Indi - |
| 3 month bill | 9.95 | 0.18 ▼ |
| 12-m bill | 10.20% | 0 - |
| Gold | $4035 | - - |
| ASPI | 21,199.37 | 49.8 ▲ |
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