Wednesday Aug 19, 2026
Wednesday Aug 19, 2026
Monday, 3 August 2026 00:24 - - {{hitsCtrl.values.hits}}
Currency in circulation and reserve money increased during the first half of 2026, reflecting seasonal demand for cash and prevailing monetary conditions, while the Central Bank of Sri Lanka (CBSL) said changes in currency holdings also reflected public preference for cash amid movements in interest rates.
According to the CBSL’s Market Operations Report published on 31 July, currency in circulation (CIC) increased by Rs. 72.7 billion during the first six months of 2026, reaching Rs. 1,641.7 billion by end-June from end-2025.
The CBSL attributed the increase largely to festive-related demand for currency by the public. It said the subsequent moderation in CIC reflected the return of currency to the banking system after the festive period.
The CBSL also noted that movements in currency holdings reflected the preference of the general public to hold currency in response to changes in interest rates.
Reserve money, which represents the monetary base of the economy and includes CIC and deposits held by commercial banks with the CBSL, increased to Rs. 1,889.1 billion by end-June 2026 from Rs. 1,796.5 billion at end-2025.
Meanwhile, the CBSL’s holdings of Government securities declined marginally during 1H 2026, falling to Rs. 2,498.1 billion by end-June from Rs. 2,508.9 billion at end-2025.
The decline was due to Treasury Bond maturities, the CBSL said, adding that the current holdings reflected the restructuring of the CBSL’s past lending to the Government.
The CBSL said it had not acquired any new Government securities since January 2024 and, accordingly, no permanent liquidity injections were undertaken through the creation of domestic assets during this period.
The movement in CIC and reserve money comes amid broader liquidity management operations by the CBSL during 1H 2026, including foreign exchange market interventions and open market operations to manage monetary conditions.
