Sri Lanka’s foreign exchange reserves experienced a decline in December 2024, falling to USD 6.09 billion from USD 6.45 billion in November 2024, according to data released by the Central Bank of Sri Lanka. This decrease marks a noticeable dip in the country’s reserve levels over the past month.
Historically, Sri Lanka’s foreign exchange reserves have fluctuated, with the current level still above the long-term average of USD 5.21 billion since 2004. The country’s reserves peaked at an all-time high of USD 9.94 billion in April 2018, but the reserves have also faced significant lows, including a record low of USD 1.27 billion in March 2009.
Foreign exchange reserves are critical for a country’s economic stability, as they consist of foreign assets controlled by the central bank, including gold, foreign currencies, special drawing rights, and marketable securities such as treasury bills and government bonds. These reserves are vital for ensuring the country can meet its international financial obligations.
The decline in reserves comes amid a broader context of economic challenges, including fluctuating interest rates, changes in money supply, and adjustments to deposit and lending rates. As of December 2024, the country’s deposit interest rate stood at 7.50%, down from 8.25% in November 2024, while the central bank’s lending rate remained steady at 8.50%.
