Market Normalization: Central Bank of Sri Lanka Reports Record Reserves in 2025 Operations Review

 

CBSL makes net purchase of USD 2 Bn during 2025. 

 The Central Bank of Sri Lanka (CBSL) has released its latest Market Operations Report (MOR) for December 2025, providing a comprehensive overview of monetary and foreign exchange operations carried out during the year, with particular focus on the second half of 2025. 

The report was issued on January 30, 2026 by the CBSL’s Market Operations Department.Sri Lanka travel guide According to the CBSL, the MOR is intended to enhance public and stakeholder understanding of the implementation of monetary policy under the Flexible Inflation Targeting (FIT) framework, supported by a flexible exchange rate regime.

 The report outlines key developments in liquidity conditions, interest rates, exchange rates, and money market and foreign exchange market operations. The CBSL noted that liquidity in the domestic money market remained at surplus levels throughout 2025, reflecting stable monetary conditions. In view of the persistent surplus, the Central Bank did not conduct Open Market Operations (OMOs) to inject additional liquidity from the end of January 2025.

 The Average Weighted Call Money Rate (AWCMR) remained broadly aligned with the Overnight Policy Rate (OPR) during the first half of 2025, although a divergence was observed from mid-July due to liquidity concentration. However, the AWCMR realigned with the OPR in January 2026, indicating improved market conditions. On the external front, the Sri Lankan rupee depreciated modestly against the US dollar, reflecting demand and supply dynamics in the domestic foreign exchange market. The CBSL intervened selectively in the foreign exchange market to build official reserves when conditions permitted and to curtail excessive volatility. 

 The report revealed that the CBSL recorded a net purchase of USD 2 billion during 2025, contributing to gross official reserves reaching US dollars 6.8 billion by end-2025. This represents the highest reserve level recorded in the post-crisis period. In addition, interbank markets showed clear signs of normalisation, supported by improved activity and confidence. The MOR also includes two feature articles on timely topics and selected indicators of market operations, reinforcing transparency in the Central Bank’s policy implementation.

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