Central Bank says large appreciation of exchange rate in April ‘temporary’

• Rupee sees YTD depreciation of 6.7%

The Central Bank said yesterday that the large appreciation of the exchange rate in April was temporary and had stabilised thereafter. 

“The exchange rate, which remained around the same level as recorded at end-March until mid-April 2021, appreciated heavily in the immediate aftermath of the receipt of the syndicated loan facility from the China Development Bank. 

However, the exchange rate reverted to the previous levels by the end of April,” Central Bank said. 

It said overall, the depreciation of the Sri Lankan rupee was limited to 0.3% against the US dollar during the month of April. The rupee recorded a depreciation of 6.7% against the dollar during the year up to 17 June. 

The Central Bank also said reflecting cross-currency movements, the Sri Lankan rupee depreciated against the euro, the pound sterling, the Australian dollar and the Indian rupee, while appreciating against the Japanese yen, in 2021 up to 17 June. 

The Central Bank continued to absorb foreign exchange from the market on a net basis to build up gross official reserves through non-borrowed sources during April, as well as on a net basis thus far during the year.