Yuan 10 b swap facility will boost external stability of Lankan economy: CB

Wednesday, 24 September 2014 00:00 -     - {{hitsCtrl.values.hits}}

The Central Bank said yesterday that the access to Yuan 10 billion ($ 1.6 billion) via the Sri Lanka China bilateral currency swap deal is expected to further strengthen the external stability of the economy. The agreement was entered into last week with the People’s Bank of China during Chinese President Xi Jinping’s State visit. “This swap facility, which is of a tenor of three years and renewable, is expected to further strengthen the external stability of the Sri Lankan economy,” the Central Bank said yesterday in its statement following the September Monetary Policy Review. It said the external sector remained buoyant with the momentum derived from increased earnings from exports of goods and services and workers’ remittances during July 2014. “Although the trade deficit during the month widened particularly as a result of higher expenditure on petroleum imports in July 2014, on a cumulative basis, the trade deficit in first seven months of 2014 recorded a decline compared to the corresponding period in 2013,” the Central Bank said. “Along with these developments, continued inflows to the financial account resulted in an estimated surplus of over $2 billion in the balance of payments (BOP) during the first seven months of the year,” it added. So far during the year, the Central Bank has absorbed over $1 billion from the domestic foreign exchange market, and gross official reserves remained above $9 billion, equivalent to around 5.9 months of imports. The access to Yuan 10 billion is in addition to strong reserves situation.