Central Bank of Sri Lanka releases Market Operations Report

The Central Bank of Sri Lanka has published the ‘Market Operations Report – December 2025’, which contains a detailed analysis of market behaviour and the Central Bank's financial measures during the second half of 2025. Operating under a flexible inflation targeting framework and a flexible exchange rate regime, the Central Bank has released this report with the aim of broadening market stakeholders' understanding of its monetary and foreign exchange operations.

The Central Bank report indicates that there was a continuous liquidity surplus in the domestic money market throughout 2025. Considering this surplus, the Central Bank refrained from conducting open market operations to inject additional liquidity into the market from late January 2025. Although the Average Weighted Call Money Rate (AWCMR) remained aligned with the policy interest rate during the first half of the year, a divergence between these rates emerged from mid-July due to the concentration of liquidity among a few banks. However, by January 2026, the Average Weighted Call Money Rate has once again aligned with the policy interest rate.

Looking at the foreign exchange market performance, the Sri Lankan Rupee showed a slight appreciation against the US Dollar in 2025, based on demand and supply dynamics. The Central Bank intervened in the domestic foreign exchange market with the aim of building foreign reserves and managing excessive exchange rate fluctuations. Accordingly, the Central Bank net purchased US$ 2.0 billion on a settlement date basis during 2025. As a result of these measures, the country's gross official reserves increased to US$ 6.8 billion by the end of 2025, which is considered the highest reserve level recorded since the economic crisis.

Furthermore, the report reveals that interbank market transactions are normalising, and an increase in market activity is observed. This latest report, which also includes feature articles on timely topics, provides stakeholders with a comprehensive overview of the Central Bank's policy measures and market indicators.