COLOMBO: Sri Lanka’s exports fell 5.0 percent from a year earlier to $897 million in June 2016 and imports fell 0.2 percent to $1,676 million, expanding the trade deficit 6 percent to $779 million, the central bank said.
In the first six months, exports fell 5.8 percent to $5,108 million. Imports fell 2.4 percent to $9,321 million.The trade gap expanded 2.2 percent to $4,213 million.
The trade gap is caused by people in Sri Lanka spending foreign exchange earned through means other than merchandise exports, such as export of labour (remittances), export of tourism services or net foreign borrowings (export of debt).
The exchange rate can fall when the central bank prints money to drive credit and imports above all sources of foreign exchange inflows. Sri Lanka printed money throughout 2015, destabilising the currency, but from around May, monetary policy has tightened.
