Sri Lanka's central bank on Friday said its foreign exchange reserves hit a record $3.9 billion after it received its share of a $250 billion International Monetary Fund allocation.
The 875 million US dollar flow from a "US-based fund" will increase the maturity profile of government debt, Central Bank governor Nivard Cabraal said.
"This is a result of a road show we did in the US recently," Cabraal said. "Investors are expecting interest rates to fall further so they can lock in profits." Government rupee bonds now yield about 13.0 percent.
Cabraal said total investments to rupee bonds would rise to the equivalent of about 1,250 million US dollars by Friday. The current ceiling for foreign rupee treasuries’ purchases was about 2.0 billion US dollars, he said.
The country had record high reserves of $3.56 billion by August 2008, pushed up by foreign purchases of government securities that were yielding over 17 percent.
But by year's end, they had plummeted by half with the central bank defending the rupee against depreciation and the withdrawal of more than $600 million after investors cashed in government securities as global financial markets crashed.
Those factors prompted Sri Lanka to reverse political course and pursue IMF assistance.
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