Central Bank collects US$ 257mn in foreign exchange in May

• Brings Year-to-Date Net Purchases to US$ 902mn

The Central Bank (CB) continued its robust purchasing of foreign currency from the local banking system in May, as strong inflows from remittances, tourism, and resilient exports helped the monetary authority rebuild its reserve buffer.

Data for May 2025 shows the CB purchased US$ 260.8 million and sold just US$ 4.0 million, resulting in a net absorption of US$ 256.8 million for the month. This represents a significant increase from the US$ 160.8 million collected on a net basis in April.

May’s performance was the second-highest monthly net purchase for the year, surpassed only by the US$ 401.9 million absorbed in March. With these latest figures, the CB has net-purchased a total of US$ 902.1 million from the domestic market in the first five months of 2025.

These ongoing purchases are critical for meeting a commitment made to the International Monetary Fund (IMF), under which the CB is to acquire US$ 2.6 billion in net foreign currency between November 2024 and December 2025 to build reserves from non-debt sources.

Based on this target, Sri Lanka has successfully collected US$ 1.44 billion from the banking system since November 2024, indicating the country is on track to meet its IMF commitment, barring any unforeseen external shocks. However, geopolitical tensions, particularly in the Middle East, remain a concern due to their potential impact on global oil prices.

The strong foreign currency inflows are underpinned by solid economic activity. In the first five months of 2025, receipts from worker remittances grew by a robust 18.2 percent to US$ 3,102.2 million, and earnings from tourism rose by 9.8 percent to US$ 1,543.1 million.

Furthermore, merchandise exports in the first four months of the year increased by 6.4 percent to US$ 4,315.8 million. Despite this, the trade deficit widened as merchandise imports growth outpaced that of exports.

By the end of May 2025, Sri Lanka’s gross official reserves stood at US$ 6.284 billion, a slight decrease from US$ 6.327 billion at the end of April.

This consistent strategy follows a record-breaking year in 2024, when the CB collected an all-time high of US$ 2,845.8 million in net foreign currency, a sharp increase from the US$ 1,896.0 million absorbed in 2023.