CBK assurances aside, could we end up going the Sri Lanka way?

Foreign exchange reserves are held by the central banks, mostly in USD, and the main purpose is to make international payments and hedge against exchange rate risks. The reserves are used to back the nation's liabilities and support and maintain confidence in the policies for monetary and exchange rate management. Additionally, the reserves serve to limit external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis or when access to borrowing is curtailed.

In a floating exchange rate system such as ours, market forces determine the value of a currency, based on its demand and supply arising mainly from international trade. An increase in exports, tourism, diaspora remittances and foreign direct investment (FDI) inflows increase the supply side.