Central Bank purchases 579 million USD in August amidst rupee appreciation

The Central Bank of Sri Lanka bought a net 579 million US dollars in August, official data showed, amidst a stabilizing local currency that touched a four-year low in May.

This marked the highest net absorption by the Central Bank from the domestic foreign exchange market since March 2024, according to official data.

The Central Bank sold no dollars in August, after selling more than 211 million US dollars in May on a net basis for the first time in 22 months.

A net total of 1,484 million US dollars was bought by the Central Bank in the first eight months of 2026 following a net purchase of two billion US dollars last year.

The rupee faced strong downward pressure in May as the import bill for fuel rose unusually high following Middle Eastern escalation amidst continued demand for dollars to purchase new vehicles.

The Central Bank bought dollars aggressively from the market to boost foreign currency reserves to meet targets agreed with the International Monetary Fund under the three billion US dollar extended fund facility and to repay multilateral and bilateral loans.

Aggressive reserve building by the Central Bank comes ahead of foreign debt repayments to sovereign bond holders in April 2028.