Sri Lanka’s external sector performance in April 2020 was severely affected by the COVID-19 pandemic related economic interruptions. The imposition of a partial lockdown had a significant impact on Sri Lanka’s merchandise exports sector while shutting down the tourism industry in April 2020. The expenditure on merchandise imports also declined, with disruption to import related supply chains and restrictions imposed on non essential imports by the government and the Central Bank. With some migrant workers returning to the country prior to the lockdown and reduced compensation and redundancies faced by some migrant workers abroad, a significant decline was recorded in workers’ remittances during the month. In the financial account, a net foreign investment outflow was recorded in the government securities market, while the Colombo Stock Exchange (CSE) remained closed throughout April 2020. With increased uncertainties and lack of inflows to the domestic foreign exchange market, the Sri Lanka rupee depreciated significantly against the US dollar during the first half of April 2020. However, the rupee began to stabilise gradually since second half of the month with improving market sentiments. Subsequent appreciation of the exchange rate helped in limiting the depreciation to less than 3 per cent so far during the year.

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