The Central Bank of Sri Lanka’s dollar sales have reached a 31-month high as the rupee faces mounting pressure from multiple directions, the Daily Mirror reported.
Foreign investors have been exiting rupee-denominated government bonds, with recent data showing Rs. 44 million in net foreign selling. The Middle East energy crisis has simultaneously driven up import costs, creating a surge in dollar demand that the Central Bank has been forced to meet through market intervention.
Currency Under Strain
The rupee has depreciated 1.6 percent against the US dollar in recent weeks as the twin pressures of capital flight and rising import bills erode foreign exchange reserves. The 31-month high in dollar sales indicates the Central Bank is burning through reserves at an elevated rate to defend the currency.
Dual Shock Impact
The intervention comes as Sri Lanka faces a dual macroeconomic shock. The Strait of Hormuz closure has pushed up fuel and commodity import costs, while the incoming 44 percent US tariff threatens to cut export earnings — further widening the current account deficit and putting additional downward pressure on the rupee.
The Central Bank’s ability to sustain this level of intervention will be closely watched by the IMF review team currently on the ground in Colombo, as reserve adequacy is a key metric in the ongoing programme.
