Reserves slip to $ 6.85 b in Sept. despite CBSL dollar purchases

Monday, 12 October 2026 04:30 - - {{hitsCtrl.values.hits}}

Foreign reserves down 1.1% MoM, or $ 78 m
Predetermined net drains of $ 5.91 b due within a year, equal to 86% of reserves

Sri Lanka’s foreign reserves fell 1.1% to $ 6.85 billion at the end of September from $ 6.93 billion a month earlier, even though the Central Bank of Sri Lanka (CBSL) bought a net $ 64.2 million from the market during the month, official data showed.

Predetermined short-term net drains on foreign currency assets, the outflows already scheduled over the next 12 months, stood at $ 5.91 billion, equivalent to 86% of reserves. Of this, $ 431 million falls due within a month, $ 1.11 billion in one to three months, and $ 4.37 billion in three months to a year.

Short positions in forwards and swaps accounted for the largest share of drains, at $ 3.58 billion. These are commitments to deliver foreign currency at a future date, including the repayment leg of currency swaps. Foreign currency loans, securities, and deposits accounted for $ 2.33 billion, comprising $ 1.37 billion in principal and $ 963 million in interest.

The CBSL has made net purchases of $ 1.55 billion in the first nine months of 2026, after net purchases of $ 2 billion in 2025.

The only break came in May, when the CBSL sold a net $ 211 million, its first net sale in 22 months, as the rupee came under heavy pressure. The fuel import bill rose sharply following the escalation in the Middle East, while demand for dollars to import vehicles continued. The CBSL also raised its Overnight Policy Rate that month. The rupee recovered over the next two months before weakening again in September.

The CBSL has been buying dollars to meet reserve targets agreed with the International Monetary Fund (IMF) under the $ 3 billion Extended Fund Facility (EFF) and to service multilateral and bilateral loans. Repayments to International Sovereign Bond (ISB) holders are due to begin in April 2028.

“Greater exchange rate flexibility remains key to absorbing shocks and supporting reserve accumulation,” IMF Mission Chief for Sri Lanka Evan Papageorgiou said after reaching a staff-level agreement after the Seventh Review last week.