Sri Lanka excess rupee reserves rise close to last crisis levels

[hirashgeff]

ECONOMYNEXT – Sri Lanka’s excess reserves deposited in the central bank above required reserves under a statutory ratio has reached 230 billion rupees, close levels that existed before a currency crises gathered pace in 2021, official data show.​

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On Thursday excess reserves topped 246 billon rupees, about 20 billion rupees shy of the peak reached under President Gotabaya Rajapaksa in 2021, when private credit started to recover as the country emerged from a Coronavirus crisis.​

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At the time money was printed by so-called direct market operations where Treasury bill auctions were scuttled with price controls (floor auction rates) imposed by the central bank.​

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Initially the excess liquidity piled up un-used, due to weak private credit and did not hit the balance of payments.​

 

[monson]