by Sanath Nanayakkare

“There is no shortcut to sustainable reserve accumulation,” Central Bank Governor Dr. P. Nandalal Weerasinghe said yesterday, warning that rebuilding Sri Lanka’s foreign-exchange buffers must be underpinned by sound economic fundamentals, policy credibility and institutional discipline rather than short-term fixes.

Addressing the inaugural Reserve Management Conference 2026 in Colombo, Dr.Weerasinghe said the task of building reserves had become increasingly difficult as geopolitical fragmentation, trade tensions, sanctions, volatile commodity prices, changing interest-rate cycles and rapidly shifting capital flows reshape the global financial environment.

For Sri Lanka, which experienced the consequences of depleted reserves during the 2022 economic crisis, the issue is particularly important.

“When reserves become critically low,” the Governor said, the consequences extend well beyond the Central Bank’s balance sheet. Imports become constrained, debt servicing becomes difficult, exchange-rate pressures intensify, inflationary pressures can increase and confidence deteriorates.

Most importantly, he said, the policy space available to respond to further shocks becomes severely constrained.

Foreign reserves should therefore be viewed not simply as financial assets but as a country’s “first line of defence” against external shocks, providing confidence, policy space and the ability to meet essential external obligations.

But Weerasinghe cautioned that reserve accumulation was not a linear process. A country could build reserves during favourable periods only to see them drawn down rapidly by an external shock.

The more important questions, therefore, were how resilient the reserves were, how accessible they were, how quickly they could be mobilised and whether they would be sufficient for the next shock.

Sri Lanka has made considerable progress since the crisis, with macroeconomic stabilisation and structural reforms strengthening the external sector compared with the difficult period of 2022–2023, he said.

However, sustainable reserve accumulation could not be separated from the broader macroeconomic policy framework.

Foreign exchange generated through exports, tourism, remittances, services and capital inflows ultimately provides the foundation for stronger reserves. When foreign-exchange inflows exceed outflows, reserves can rise, but maintaining that process while preserving exchange-rate flexibility, price stability, external debt-servicing capacity and market confidence remains a delicate policy challenge.

Dr.Weerasinghe warned against relying excessively on central-bank intervention, monetary expansion or external borrowing to rebuild buffers. Such measures could distort market signals, generate inflationary pressures or simply create future debt-service obligations.

“The most sustainable reserve accumulation strategy is therefore not simply to acquire reserves,” he said. “It is to build an economy that naturally generates and retains foreign exchange.”

The Governor said geopolitical risk had now become an integral part of reserve management. Strategic competition among major economies, sanctions and financial fragmentation were forcing reserve managers to reconsider the risks associated with particular currencies, jurisdictions and financial markets.

Although the US dollar continues to dominate international trade, finance and global reserves, diversification has a role to play. But diversification for its own sake could reduce liquidity and operational efficiency, he cautioned.

For official reserves, safety and liquidity must remain paramount, particularly because reserves may have to be deployed precisely when financial markets are under severe stress.

Sri Lanka’s vulnerability to energy and geopolitical shocks also makes the issue particularly acute. As an energy-importing country, a sharp rise in global oil prices can rapidly increase the import bill. At the same time, geopolitical tensions can weaken tourism and other sources of foreign exchange, producing the potentially damaging combination of rising outflows and declining inflows.

Climate-related disasters could create similar pressures by disrupting agriculture, infrastructure, tourism and imports.

Dr. Weerasinghe said reserve adequacy should therefore no longer be judged by a single number or conventional indicator such as import cover. Short-term external liabilities, debt-service requirements, capital-flow volatility, exchange-rate flexibility, contingent financing and the probability and magnitude of external shocks should also be considered.

He also highlighted the growing role of gold, technology and artificial intelligence in reserve management, while stressing that innovation should never compromise safety and liquidity.

Ultimately, the Governor said, reserves were not managed simply to earn a return but to protect economic stability and preserve confidence.

“Buffers must be built before they are needed,” he said, “because by the time an external crisis arrives, it may already be too late to begin building them”.

By Hiran H. Senewiratne

The escalation of tensions in the Middle East and the surge in oil prices are continuing to negatively impacted investor sentiment, market analysts said yesterday.

The All Share Price Index went down by 93.55 points, while the S and P SL20 declined by 23.8 points.

Turnover stood at Rs 1.45 billion with five crossings. Those crossings were; Sampath Bank 3 million shares traded to the tune of Rs 428 million; its shares traded at Rs 142.50, Commercial Bank 256,000 shares crossed for Rs 49 million; its shares traded at Rs 204.50, Digital Mobility Solutions 190,000 shares crossed to the tune of Rs 30 million; its shares fetched Rs 158, Overseas Realty 493,000 shares crossed for Rs 26 million; its shares sold at Rs 53 and Royal Ceramics 469,000 shares crossed to the tune of Rs 23 million; its shares traded at Rs 48.50.

In the retail market companies that mainly contributed to the turnover were; Commercial Credit and Finance Rs 38 million (376,000 shares traded), Renuka Agri Rs 33 million (2.8 million shares traded), Sierra Cables 32 million (925,000 shares traded), Singer SriLanka Rs 31 million (359,000 shares traded), Dialog Axiata Rs 31 million (637,000 shares traded) and Access Engineering Rs 30 million (383,000 shares traded). During the day 35 million share volumes changed hands in 13380 transactions.

It is said that banking sector counters, especially Commercial Bank, led the market,which contributed close to half of the total turnover. Apart from that other sectors, including manufacturing, telecom and construction counters performed well.

Meanwhile, Melstacorp (down 1.32 percent at Rs 187.00 ), Royal Ceramics Lanka (down 1.22 percent at Rs 48.50 ), Hemas Holdings (down 1.27 percent at Rs 31.20 ), and Dipped Products (down 1.50 percent at Rs 59.00) were top negative contributors.

Yesterday the rupee was quoted at Rs 328.60/70 to the US dollar in the spot market from Rs 328.60/80 the previous day, while bond yields were quoted steady to lower, dealers said.

Softlogic GLOMARK, one of Sri Lanka’s leading supermarket chains, has been recognised at the Dragons of Sri Lanka Awards 2026, winning Gold and Black Dragon for Loyalty & Acquisition and Product Relaunch. The recognition reflects a deliberate strategic shift in how GLOMARK engages with the evolving needs of Sri Lankan consumers. Rather than competing primarily on convenience or price, GLOMARK built a purpose-led proposition around “A Better Life for Your Home,” repositioning the everyday grocery shop as an opportunity to make healthier, more considered choices for customers and their families.

Launched nationally as “Better Life,” the campaign brought this proposition to life through a vibrant commercial and memorable jingle, before extending the idea beyond advertising and into the shopping experience itself. Trained employees, curated product ranges and a re-aligned store environment were designed to make better choices more visible, accessible and easier to adopt.

The strategy translated into measurable business results. Active loyalty customers grew by 21%, footfall increased by 33%, while GLOMARK’s most frequent shoppers grew by 50%. The results demonstrate that building relevance and trust can create stronger customer relationships than competing solely on price or convenience.

Softlogic GLOMARK CEO Terry O’Connor said: “This award signals that our long-term strategy is working. We set out to build a brand customers choose because it genuinely improves their lives, not simply because it is convenient or cheap. Seeing that reflected in both industry recognition and real business growth confirms that we are on the right path and strengthens our confidence as we continue investing in GLOMARK’s future.”

Softlogic GLOMARK Head of Marketing Chamindri Pilimatalauwe said: “Our customers are increasingly making more deliberate, health-conscious, better choices, and this recognition confirms that our brand strategy is responding to that shift. We believe that when we curate every aisle and guide customer’ through it, we are also helping curate the lives of our customers. In that sense, we are more than a supermarket. We have the ability to influence how Sri Lanka lives, and we take that responsibility seriously. ගෙට Better Life’ was never intended to be a single campaign moment. It represents a fundamental repositioning of what GLOMARK stands for, designed to inspire and earn loyalty rather than simply drive footfall.”