Sri Lanka said that its foreign exchange reserves dipped by 24% MoM to $2.36bn in January from $3.1bn in December after it repaid a $500mn dollar bond on January 18. In January, India extended a $400mn swap line to Sri Lanka, deferred an Asian Clearing Union settlement of $500mn and gave a new line of credit of $500mn for the purchase of petroleum products. Sri Lanka’s USD-denominated debt load this year is over $6bn, with a dollar bond maturity of $1bn due in July which would further hurt its reserves. Sri Lanka was downgraded by Moody’s/S&P/Fitch to Caa2/CCC/CC with the drop in FX reserves and delays in securing fresh funds to meet obligations being cited.
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