Sri Lanka prints SRR hike, 296 billion rupees of money deposited in banks in September
ECONOMYNEXT – Sri Lanka printed nearly three hundred billion rupees in September 2021, donating money to deal with a doubling of an increase in the legal reserve amid failed bond auctions and some interventions that have been sterilized, official data shows as the balance of payments continues to deteriorate.
Sri Lanka reduced its reserve ratios in 2020 under an exceptionally flexible policy and freed liquidity was lost due to a record balance of payments deficit and the expansion of banknotes in circulation and banknotes. inflation.
In 2020, more liquidity was also injected through outright purchases of treasury bills into the central bank’s balance sheet.
In September 2021, the central bank doubled the reserve currency to 4.0%. By then, however, the repeated injections of liquidity, currency shortages, and the credibility of a soft peg with the US dollar had been lost.
As a result, the increase in the SRR was imprinted with the acquisition of domestic assets. The central bank injected 103.5 billion rupees for 87 days on September 27.
More money was filled thanks to the failed bond auctions. The balance was filled with injections overnight.
In September 2020, some interventions aimed at ensuring convertibility into printed currency were also topped up with more printed currency (sales of sterilized currency) to withstand a contraction of the reserve currency.
At the end of September, the monetary reserve stood at Rs.1296 billion, up 45% from the previous year when the SRR was lower. In Sri Lanka, overnight excess liquidity, which can be used for final clearing of transactions, is not considered to be reserve currency.
From December 2019 to September 2021, the central bank printed 1.467 billion rupees, of which 363 billion rupees was absorbed in an expansion of the reserve currency, including for the inflation generated and more than 5 billion US dollars were lost in balance of payments deficits (decline in international reserves).
Sri Lanka’s foreign exchange reserves fall to US $ 2,267 million in October 2021
Sri Lanka’s central bank foreign assets negative $ 780 million in September
Gross official reserves fell to US $ 2.2 billion in October, from US $ 7.6 billion in December 2019 (Colombo / Nov08 / 2021)