Foreign reserves rise to $7.1 bn by end-October

Sri Lanka’s gross official foreign reserves increased by US$219 million to US$7.086 billion by the end of October 2026, Central Bank data showed.

The increase came as the Central Bank purchased US$191 million from the domestic foreign exchange market during the month.

Gross reserves can also rise through foreign currency inflows to the Treasury, including budget support and other loans, as well as through foreign exchange swap transactions.

The latest increase comes amid continuing efforts to rebuild the country’s external buffers following the economic crisis.

However, economists have raised concerns over the pace of reserve accumulation and the impact of monetary policy on liquidity and exchange rate stability.

The Central Bank’s purchases of foreign currency inject rupee liquidity into the domestic financial system unless offset through other operations. Excess liquidity can, in turn, place downward pressure on interest rates and complicate monetary policy management.

There have also been calls for the Treasury to purchase foreign currency directly in certain circumstances, allowing the Central Bank to build reserves without creating additional domestic liquidity.

Sri Lanka’s reserve position remains a key indicator watched closely under the country’s IMF-supported economic reform programme, as the authorities seek to strengthen external buffers while maintaining price and financial stability.