The Central Bank of Sri Lanka (CBSL) has purchased over $1 billion from the domestic foreign exchange market in the first half of 2025, significantly enhancing liquidity, strengthening reserves, and stimulating private sector credit.
According to the CBSL’s June 2025 Market Operations Report, this injection contributed Rs. 408.7 billion to market liquidity, helping foreign reserves reach $6.08 billion by end-June. Despite absorbing factors like loan repayments and currency withdrawals, average surplus liquidity stood at Rs. 154.6 billion.
In response to this surplus, the CBSL halted liquidity-injecting OMOs from January 2025 and allowed reverse repo maturities to unwind. The Average Weighted Call Money Rate (AWCMR) aligned with the Overnight Policy Rate, ending June at 7.75%. Credit to the private sector grew 16.5% year-on-year.
Meanwhile, the rupee depreciated 2.46% in H1, prompting targeted forex market interventions. The CBSL absorbed $1.07 billion and launched Bloomberg’s BMatch platform to enhance transparency.
With increased interbank forex trading and steady policy easing, the financial market showed signs of stabilisation. The CBSL reiterated its commitment to flexible inflation targeting and selective interventions to ensure orderly conditions.
