Sri Lanka Central Bank has received 1.1 billion dollars from the Reserve Bank of India under the currency swap agreement between the two reserve banks. This will shore up Sri Lanka’s foreign reserves and ease pressure on the local currency. The Sri Lankan Central bank has announced that the latest injection was in addition to $400 million received in April under another RBI currency swap facility available to members of the South Asian Association for Regional Cooperation bloc. This is great for those who have been looking into banks in sri lanka for home or personal loans, as well as setting up a savings account, as they will feel safe in the knowledge that they are putting their trust in a bank that has the funds to help them at important times.

Some Banking Terms

What is FOREX Reserve?

FOREX Reserve are assets held by a central bank or other monetary authority, usually in various reserve currencies, mostly the United States dollar.

Foreign-exchange reserves are called reserve assets in the balance of payments and are located in the capital account. Hence, they are usually an important part of the international investment position of a country

What is Balance of Payment Crisis?

A BOP crisis also called a currency crisis, occurs when a nation is unable to pay for essential imports and/or service its debt repayments. Typically, this is accompanied by a rapid decline in the value of the affected nation’s currency.

Capital Account

Capital account can be regarded as one of the primary components of the balance of payments of a nation. It gives a summary of the capital expenditure and income for a country. A surplus in the capital account means money is flowing into the country.