Sri Lanka's foreign reserves were steady at 5.2 billion US dollars by December 18, boosted by foreign inflows into debt markets and International Monetary Fund loans, the Central Bank said.
By end-November gross official reserves, which includes fiscal balances, were 5,228 million US dollars, up from 4,822 million US by end-October.
Reserves with balances at the Asian Clearing Union, a regional settlement arrangement, were 5,308 million US dollars by end-November.
The Central Bank said 262 million US dollars had flowed into short-term Treasury bills and 1,068 million US dollars into Treasury bonds.
Remittances from expatriate workers had increased to 2,774 million US dollars to November, up 12.9 percent from a year earlier.
The remittances were 557 million US dollars above the trade deficit. Remittances which increases the spending power of economic agents is a key driver Sri Lanka's trade deficit under Sri Lanka's pegged exchange rate regime, with capital controls.
But heavy contractionary sterilization of rupees generated from inflowing remittances will tend to deny its use in the economy and lock up the corresponding foreign currency as reserves.
source - www.lbo.lk
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