Financial Times

Pressure eases on exchange rate

Increased foreign exchange inflows due to the growth in tourism, private transfers and capital account flows reduced the pressure on the exchange rate and increased foreign exchange liquidity in the first four months of the year, the Central Bank announced.

This allowed the Central Bank to buy $103 million from the market during this period.

The trade deficit in the first four months of 2003 increased by $63 million over the deficit in the first four months of 2002, to $566 million, a Central Bank statement said.

The recovery in both exports and imports that had been experienced by Sri Lanka during the last few months continued for the seventh consecutive month in April, 2003, it said.

The cumulative export earnings during the first four months of 2003 increased by 13 per cent, in contrast to a drop of 21 per cent in the comparable period in 2002.

Similarly, the cumulative imports increased by 13 per cent as against a decrease of 12 per cent in 2002.

The cumulative export earnings during the first four months of 2003 were $1,502 million, compared with earnings amounting to $1,332 million recorded during the corresponding period in 2002.

The largest contribution to export growth came from textile and garment exports, followed by machinery and equipment, food and beverages and rubber based products.

Earnings from agricultural products declined by one per cent, largely due to decreases in the exports of tea and cloves.

The reduction in export earnings from minor agricultural products was largely attributable to the substantially lower earnings from the exports of cloves compared to the previous year. Expenditure on imports during the first four months of 2003 was $2,068 million, an increase of 13 per cent over the imports in the first four months of 2002.