FINANCIAL CHRONICLE – The Central Bank of Sri Lanka has cautioned the public against being misled by certain groups that lack the expertise to accurately interpret monetary data. This statement follows allegations that the bank’s inability to absorb excess rupees to maintain lower interest rates has spurred import demand, contributing to the recent significant decline in the value of the rupee.
In a post on social media, the Central Bank emphasized that issues related to money printing, money supply, and exchange rate determination require specialized technical understanding. It urged the public to remain vigilant against misleading statements being circulated by individuals or groups lacking such expertise.
This announcement precedes a monetary policy meeting, the third of six scheduled for 2026, amidst growing speculation that the bank may need to tighten its policy in response to the pressures on the currency, particularly due to inflationary trends driven by rising fuel prices.
Rajith Keerthi Thennakoon, a former provincial governor and executive director at the relatively lesser-known Centre for Human Rights and Research, has reported that money printing in Sri Lanka has surpassed Rs. 2.1 trillion over the last 15 months. He also noted that the total currency in circulation has surged by Rs. 303,956 million within the past 17 months.
Several analysts have pointed out that the Central Bank has struggled to reduce the excess liquidity resulting from its purchases of US dollars aimed at bolstering foreign currency reserves. Consequently, they argue that lending institutions have been offering loans at lower rates, which has led to an uptick in imports, driven by cheaper borrowing costs, thereby increasing the demand for dollars. (Colombo/May 25/2026)
