The Central Bank of Sri Lanka (CBSL) sold a net USD 211.3 million in May as it leaned against sharp depreciation pressure on the rupee, EconomyNext reported, marking the second consecutive month of net dollar sales and a clear break from the build-up programme that had carried official reserves higher through 2025.

Official data cited in the report showed the Central Bank bought USD 12 million and sold USD 223.3 million during the month, putting it firmly on the selling side of the market for the first time in 22 months when it began to defend the currency. The regulator had been a net dollar buyer for most of the post-restructuring cycle, taking in USD 2 billion across 2025 as it targeted reserve floors set under the IMF Extended Fund Facility.

April was the inflection point. The Central Bank sold USD 13 million on a net basis that month, the first net sale since June 2024. Across the first five months of 2026 the regulator is still net long, at USD 485.9 million on a cumulative basis, but the pace has narrowed sharply.

Despite the May intervention, gross official reserves grew 1.7 percent to USD 6,873 million by end-May, up from USD 6,759 million a month earlier, the Central Bank’s own data showed. The reserve build-up has been supported by the People’s Bank of China swap proceeds and continued multilateral disbursements.

The rupee depreciated more than 4 percent in May. The selling rate at commercial banks crossed Rs. 340 against the US dollar on June 4 and the unofficial market touched Rs. 345 a day later, according to Public Security Minister Harsha de Silva, who described the move as a passing fluctuation tied to Middle East crude pressure. EconomyNext put the cumulative slide at 7.8 percent through June 5.

Foreign holders have continued to sell government securities. EconomyNext reported a USD 14.7 million net outflow in the week ended June 4 — a fourth straight week of foreign selling — despite the Central Bank’s 100 basis point hike in the Overnight Policy Rate on May 26.

The Central Bank has been rebuilding reserves ahead of the resumption of foreign debt repayments to sovereign bond holders, which is scheduled to begin from April 2028.

Source: EconomyNext.