Reserve money steady, cash circulation dips
Sri Lanka’s reserve money remained steady for a second consecutive week, signalling a cautious but stable monetary stance, as the Central Bank manages liquidity in a gradually recovering economy.
According to data for the week ending 17 April, reserve money – comprising currency in circulation and commercial bank deposits held with the Central Bank – stood at Rs. 1,798.5 billion, showing no significant movement from the previous week’s Rs. 1,798.4 billion.
Currency in circulation dipped slightly to Rs. 1,579.8 billion, down from Rs. 1,581.7 billion, marking a marginal retreat following seasonal spending patterns tied to the April New Year period.Market liquidity also narrowed during the week, with the banking system’s surplus dropping to Rs. 57.33 billion from Rs. 61.71 billion. Despite the tighter liquidity, short-term borrowing costs held firm, with the Average Weighted Call Money Rate (AWCMR) unchanged at 7.96%, Indicating continued stability in overnight interbank markets.
Meanwhile, broad money (M2b) continued its upward trend, rising to Rs. 14.54 trillion in February, reflecting 12.8% year-on-year growth. The increase was driven primarily by higher domestic credit and net asset expansion within the banking system.The Central Bank’s holdings of government securities remained flat at Rs. 2.51 trillion, suggesting that monetary authorities refrained from large-scale interventions during the week.
