Sri Lanka’s official reserves rose to US$6.59 billion in July, offering another measure of stability – although continuing pressure on the currency provides an important qualification
COLOMBO, Sunday – Sri Lanka’s gross official reserves increased to US$6.591 billion at the end of July, rising by US$133 million from US$6.458 billion in June, according to the latest figures attributed to the Central Bank.
The month-on-month increase amounts to approximately 2.1 per cent and provides another positive indicator as Sri Lanka continues the lengthy process of rebuilding the external buffers that were severely depleted during the economic crisis. The improvement will inevitably be welcomed by the Government as evidence that the country’s external position remains considerably stronger than during the worst period of the crisis.
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‘ There is, however, another side to the numbers. The Central Bank reported at the end of July that the Sri Lankan rupee had depreciated by 7.8 per cent against the US dollar since the beginning of 2026, attributing external-sector pressure partly to the conflict in the Middle East. The Bank nevertheless said the pace of depreciation had moderated following monetary, fiscal and macroprudential measures.
That makes the latest reserve figure encouraging without necessarily making it a declaration of victory. Reserve accumulation provides the country with greater protection against external shocks, but Sri Lanka remains exposed to energy prices, geopolitical disruption, debt obligations and movements in foreign exchange earnings.
The more important test, therefore, may be whether the country can continue building reserves while maintaining currency stability and generating foreign exchange through exports, tourism, investment and remittances rather than depending excessively on borrowing.
For a country that discovered only four years ago what happens when foreign currency buffers disappear, US$6.59 billion represents considerable progress. Be that as it may, the real measure of recovery will be whether those reserves can be strengthened while the economy itself becomes capable of earning substantially more dollars.
