Sri Lanka reserves slip to US$6.85 billion in September despite CBSL dollar buying

Sri Lanka's official foreign reserves edged lower in September even though the Central Bank kept buying dollars in the market. The figures matter to anyone who pays suppliers abroad or earns in foreign currency, because reserves are one of the main supports behind the rupee.

EconomyNext reported on 11 October that Sri Lanka's foreign reserves fell 1.1 percent to US$6,851 million at the end of September 2026, from US$6,929 million a month earlier. This happened while the Central Bank of Sri Lanka (CBSL) bought a net US$64.2 million from the market during the month.

Daily FT, in a report on 12 October based on official data, gave the same headline figures and added detail on what the country already owes in the year ahead. It said predetermined short-term net drains on foreign currency assets, meaning outflows already scheduled over the next 12 months, stood at US$5.91 billion, equal to 86% of reserves. Of this, Daily FT said:

• US$431 million falls due within one month
• US$1.11 billion falls due in one to three months
• US$4.37 billion falls due in three months to a year

According to Daily FT, short positions in forwards and swaps were the largest part of these drains at US$3.58 billion. These are commitments to deliver foreign currency at a future date, including the repayment leg of currency swaps. Foreign currency loans, securities and deposits made up US$2.33 billion, of which US$1.37 billion was principal and US$963 million interest.

Both outlets said the CBSL has made net purchases of about US$1.55 billion in the first nine months of 2026, after net purchases of US$2 billion in 2025. The only break was in May, when the bank sold a net US$211 million, its first net sale in 22 months. EconomyNext said the rupee was under heavy pressure that month as the fuel import bill rose after the escalation in the Middle East, while demand for dollars to import vehicles continued. Both reports said the rupee recovered over the following two months before weakening again in September.

EconomyNext said analysts consider the CBSL's year end reserve target of US$8 billion achievable, given expected inflows from the IMF and other multilateral lenders in the final quarter of 2026. That is a forecast, not a result. Daily FT quoted IMF Mission Chief for Sri Lanka Evan Papageorgiou, speaking after the staff-level agreement on the Seventh Review: "Greater exchange rate flexibility remains key to absorbing shocks and supporting reserve accumulation."

For importers, the level of reserves and the pace of CBSL dollar buying shape how the rupee behaves. CBSL data shows the indicative US dollar rate drifting from about Rs 330.60 on 5 October to about Rs 330.96 on 9 October, and EconomyNext reported the spot rupee closing at 330.85/95 on Friday 9 October. Moves have been small, but the September dip in reserves came at a time when the oil bill is still high. Trading Economics showed Brent near US$104 a barrel on 9 October, as covered in our post on Brent at US$104 and Hormuz attacks.

The schedule of drains also matters. A large share of the obligations over the next year is tied to forwards and swaps, so the CBSL needs to keep building reserves to cover them. Both outlets noted that repayments to International Sovereign Bond holders are due to begin in April 2028.

For exporters, the IMF comment on exchange rate flexibility suggests the rate is expected to keep moving with market conditions rather than being held at a fixed level.

• Check the CBSL daily TT buying and selling rates before pricing quotations or confirming import orders, rather than relying on last month's rate.
• Ask your bank how its forward contract pricing has changed since September if you have large payments due in the next three months.
• Keep an eye on IMF and multilateral inflows in the fourth quarter, which analysts say could lift reserves toward the US$8 billion target.
• Review payment terms with suppliers and buyers so that the timing of foreign currency receipts and payments lines up where possible.
• Read our earlier note on the CBSL policy rate decision in September for the wider rate picture.