• Depreciation of Chinese yuan against rupee led to significant value decrease in 2024
• Swap facility with PBoC renewed for three years, remains zero-cost standby arrangement

Central Bank data reveals that the rupee value of Sri Lanka's 10 billion Chinese yuan swap facility with the People’s Bank of China (PBoC) decreased by over Rs. 48 billion by the end of 2024 due to rupee appreciation.

According to the Central Bank’s financial statements and operational report, the rupee equivalent of the PBoC swap facility saw a Rs. 48.7 billion reduction as the Chinese yuan depreciated by 13.9% against the Sri Lankan rupee in 2024.

Consequently, the value of the 10 billion yuan swap, which stood at Rs. 459.9 billion at the end of 2023, fell to Rs. 411.2 billion by the close of 2024.

Furthermore, the Central Bank of Sri Lanka and the PBoC successfully renewed the swap agreement, initially signed in 2021, for an additional three years in December of the previous year, maintaining the original terms and conditions.

The initial agreement in December 2021 facilitated a swap of 10 billion yuan (approximately $ 1.5 billion equivalent) from the PBoC in exchange for an equivalent amount of Sri Lankan rupees. These funds are currently maintained as a zero-cost stand-by arrangement.

A key condition for utilising the PBoC swap was maintaining import cover equivalent to three months of imports. As of the end of April, Sri Lanka’s reserves provided approximately four months of import cover, totaling $ 6,326 million.

Due to the depreciation of the PBoC swap and repayments related to the Reserve Bank of India swap, the Central Bank’s outstanding foreign liabilities decreased to Rs. 868.5 billion by the end of 2024, down from Rs. 1.26 trillion at the end of 2023.