Central Bank net-bought just $64.2 million in September as the rupee slipped 0.9%

The Central Bank of Sri Lanka bought a net US$64.2 million from the domestic foreign exchange market in September — a fraction of its recent monthly pace — as the rupee came back under depreciation pressure and lost 0.9% over the month.

The Bank purchased US$85 million and sold US$20.8 million during September, official data show, EconomyNext reported.

The pace has slowed sharply

September’s net purchase takes the Central Bank’s buying for the first nine months of 2026 to US$1,548.8 million, following a net purchase of about US$2 billion across the whole of last year.

Set against that nine-month total, September contributed roughly 4% of the year’s net buying — a marked step down from the summer months, when the Bank was absorbing dollars at several hundred million a month as the rupee strengthened.

A year of reversals

The rupee’s path through 2026 has been unusually uneven. It came under heavy pressure in May, when the fuel import bill rose steeply after the escalation in the Middle East and demand for dollars to fund vehicle imports continued. That month the Central Bank was a net seller of more than US$211 million — its first net sale in 22 months — and the currency touched a four-year low.

It then reversed course and gained over the following two months before weakening again in September. By the end of September the rupee had depreciated 6.3% against the US dollar on a year-to-date basis, the Central Bank said, and it closed the first week of October at 330.55/65.

Why the Bank keeps buying

The Central Bank has been accumulating foreign currency to meet the reserve targets agreed with the IMF under the US$3 billion Extended Fund Facility, and to service multilateral and bilateral debt. The build-up also runs ahead of the resumption of payments to sovereign bondholders in April 2028.

A slower month of buying is therefore a double signal: less pressure to sterilise inflows, but less progress toward reserve targets that are themselves a programme condition. Fuel costs remain the live variable — the Bank’s own inflation projection assumes the Middle East conflict eases, while Brent trades above US$100 a barrel.

Not reported

The data as reported do not give the gross reserve position at end-September, state how much of September’s selling was to meet state fuel import payments, or indicate whether the Bank expects to return to its earlier buying pace.