The Central Bank of Sri Lanka absorbed US$579 million from the domestic foreign exchange market in August 2026 on a value-date basis, Ada Derana reported, citing the bank’s weekly economic indicators.
The figure represents net purchases of foreign currency from the local market, and comes as official reserves continue to recover. Gross official reserves were provisionally estimated at US$6.6 billion at end-July 2026, a total that includes proceeds from the People’s Bank of China swap arrangement.
What the intervention did to the rupee
Hiru News reported that the scale of the purchases held the rupee to only a slight appreciation during the month, with the currency allowed to strengthen from 336 to 328 against the US dollar.
That follows a heavier-handed July, when the Central Bank bought US$348 million at 336 per dollar and permitted no appreciation at all, injecting excess rupee liquidity into the system as foreign investors bought rupee-denominated bonds.
Hiru set both months against a volatile year. The rupee fell from 309 to 340 per dollar in March, a move the Central Bank attributed to higher oil import costs, after depreciating steadily through 2025 to reach 309. Heavy dollar purchases in December 2025 prevented appreciation after Cyclone Ditwah slowed private credit growth.
Economic analysts quoted by Hiru have criticised the flexible inflation-targeting framework, arguing that the currency weakened sharply in 2026 even though the government was running a budget surplus and raising taxes. Ada Derana’s account carried no such criticism.
Debt and the securities market
Outstanding central government debt stood at Rs. 30.53 trillion at end-April 2026, according to the same indicators. Domestic debt accounted for Rs. 18.85 trillion, with the rupee value of outstanding foreign debt at Rs. 11.68 trillion.
Treasury Bill yields were broadly stable in the primary market over the past week, apart from a marginal decline in the 182-day yield. Both Treasury Bill and Treasury Bond yields eased slightly in the secondary market. The rupee value of bills and bonds held by foreign investors was broadly unchanged week on week, and the latest Treasury Bill auction was oversubscribed by around 2.5 times.
Not reported
Neither outlet gave a year-to-date absorption total, an August reserves figure to sit alongside the end-July estimate, or any comment from the Central Bank on how long it intends to keep buying at this pace. Neither said what share of gross reserves is usable, and neither reported the size of the PBOC swap component.
