For first time, govt securities market records net monthly inflow of USD 39 Mn
Merchandise trade account deficit narrows to USD 544 Mn
Sri Lanka’s external sector continued its positive momentum in October 2024, supported by robust inflows to the current account, resulting in an increase in reserves and an appreciation of the Sri Lanka rupee.
For the first time foreign investments in the government securities market recorded a net monthly inflow of US dollars 39 million. Foreign flows to the CSE, including both primary and secondary market transactions, recorded a net inflow of US dollars 3 million in October 2024 and a cumulative net inflow of US dollars 46 million during January-October 2024
The deficit in the merchandise trade account narrowed to US dollars 544 million in October 2024 from US dollars 683 million recorded in October 2023, reflecting the positive impact of higher export earnings.
However, the cumulative deficit in the trade account during January to October 2024 widened to US dollars 4,745 million from US dollars 4,024 million recorded over the same period in 2023.
Earnings from merchandise exports increased by 24.8 per cent (y-o-y) to US dollars 1,158 million which was primarily driven by industrial and agricultural exports. Earnings from exports of agricultural goods increased primarily due to higher volumes and prices of tea, along with increased exports of spices and coconut-based products.
The increase in industrial goods exports in October 2024 (y-o-y) was broad-based, with notable contributions from garments and petroleum products.
Expenditure on merchandise imports recorded an increase of 5.7 per cent (y-o-y) to US dollars 1,702 million. Services sector inflows (excluding tourist earnings) amounted to USD 320 million in October 2024 compared to USD 308 million in October 2023. Sea transport services and computer & IT/BPO related services were the main contributors to the inflows in October 2024.
Total services sector outflows were estimated at US dollars 284 million. Workers’ Remittances increased to USD 5,431 million during January to October 2024 compared to USD 4,862 million in the corresponding period in 2023.
Tourist earnings were estimated at USD 2,534 million during Jan-Oct 2024 compared to USD 1,593 million during Jan-Oct 2023. Earnings from tourism in October 2024 are estimated at US dollars 186 million, compared to US dollars 181 million in September 2024 and US dollars 137 million in October 2023.
Gross Official Reserves amounted to USD 6.5 billion at end October 2024, recording over US dollars 2 billion increase from end 2023.
Rupee appreciates 11.3% against USD
The Sri Lanka rupee continued its appreciating trend. The Sri Lanka rupee continued to record a monthly appreciation for the month of November 2024 in line with the overall appreciation observed so far during the year. The Sri Lanka rupee appreciated by 11.3% against the US dollar during the year up to November 29, 2024.
Meanwhile, reflecting cross-currency movements, the Sri Lanka rupee appreciated against other major currencies, such as the euro, the pound sterling, the Chinese yuan, the Japanese yen, the Indian rupee, and the Australian dollar during the year up to 29 November 2024.
In line with the nominal appreciation of the Sri Lanka rupee during the year up to October 2024, the real effective exchange rate against the basket of 24 currencies (REER 24) also appreciated.
Accordingly, the REER 24 index (2017=100) increased from 70.2 at end December 2023 to 74.5 at end October 2024, reflecting a reduction in external competitiveness during the period.