According to the latest external trade data released by the Central Bank of Sri Lanka, country's external sector recovered further in September 2020, supported by the continued improvement in the trade deficit, a notable increase in workers’ remittances and the resultant stability in the domestic foreign exchange market.

The trade deficit improved in September 2020, compared to a year earlier, with a more than expected rebound in merchandise exports and a reduction in merchandise imports during the month.

In September 2020, workers’ remittances, recorded the highest year-on-year growth since end 2011.

In the financial account, the government securities market recorded a marginal foreign investment inflow during the month, while the Colombo Stock Exchange (CSE) recorded outflows.

Net inflows to the domestic foreign exchange market eased the pressure on the exchange rate and enabled the Central Bank to absorb foreign exchange, on a net basis, to build up gross official reserves.

Reflecting these developments, the Sri Lankan rupee appreciated during the month of September 2020.