Remittance inflows face twin declines: month-on-month and year-on-year

By Sanath Nanayakkare

Workers’ remittances amounted to US dollars 530.1 mn in November 2024, compared to US dollars 587.7 mn in October 2024, and US dollars 537.3 mn in November 2023, according to the Weekly Economic Indicators of the Central Bank.

This means that remittance inflows have declined by US$ 57 million month-on-month, and by US$ 7 million year-on-year in spite of the fact that more migrant workers are supposedly remitting their money to Sri Lanka.

However, there is an encouraging ray of hope for the domestic economy as earnings from tourism have amounted to US dollars 272.9 mn in November 2024, compared to US dollars 185.6 mn in October 2024 and US dollars 205.3 mn in November 2023.

Another metric that adds to this optimism is during the year up to 06th December 2024, the Sri Lanka rupee has appreciated against the US dollar by 11.5 per cent.

Further, there was a very slight drop in Weekly Average Weighted Prime Lending Rate (AWPR) for the week ending 06th December 2024, as it decreased by 1 bps to 9.09 per cent compared to the previous week.

The report included the following.

Reserve money had increased compared to the previous week mainly due to increase in the currency in circulation.

The total outstanding market liquidity was a surplus of Rs. 176.865 bn by 06th December 2024, compared to a surplus of Rs. 146.910 bn by the end of the last week.

During the week, T-Bill yield rates remained broadly stable in the primary market while a slight reduction was observed in the yield rates of T-Bills and T-Bonds in the secondary market.

The rupee value of T-Bills and T-Bonds held by foreign investors increased by 17 per cent during the reporting week.

In the reporting week, the auction for T-Bills experienced oversubscription rate of approximately 2.0 times.

An increase of 8.7 per cent was observed in the total volume of secondary market transactions in T-Bills and T-Bonds in the reporting week compared to the week before.

The net purchases by the Central Bank from the domestic foreign exchange market amounted to US dollars 327.0 mn in November 2024.

Meanwhile, marking an increase, the gross official reserves were provisionally estimated at US dollars 6,462 mn as at end November 2024. This includes the US $ 1.4 billion equivalent yuan swap with the People’s Bank of China.

“The once-dormant Chinese swap facility has become usable as Sri Lanka’s foreign reserves have exceeded three months of imports, but the authorities have still not chosen to utilize it,” a source familiar with the matter told The Island Financial Review.