Sri Lanka’s external sector showed a mixed performance in March 2021 with a widened trade deficit on the one hand, and a healthy growth in workers’ remittances and a slight pickup in the tourism sector on the other. The deficit in the trade account widened in March 2021, for the first time since April 2020. Both exports and imports were significantly higher in March 2021, compared to March 2020 as well as February 2021. However, workers’ remittances grew steadily, and the tourism sector continued the recovery process, albeit at a very slow pace. In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) continued to record marginal net outflows in March 2021 as well. The Sri Lankan rupee depreciated against the US dollar during the month, partly reflecting the seasonal demand for imports. However, mainly supported by the regulatory measures that were in place till mid-March, the Central Bank absorbed foreign exchange on a net basis during the month, to strengthen the gross official reserve position.
