Former United National Party Deputy Leader and Parliamentarian Ravi Karunanayake has warned that the Central Bank’s purchase of excess US dollars from commercial banks using newly issued rupees could have a severe impact on small and medium-sized enterprises (SMEs).
Karunanayake said the Central Bank has been aggressively purchasing dollars from the domestic market as part of efforts to reduce the country’s structural foreign exchange deficit. He noted that net dollar purchases in July alone amounted to US$348.6 million.
According to the MP, these purchases have helped the country remain around US$700 million above the minimum threshold of minus US$2.035 billion set for the relevant International Monetary Fund (IMF) review period.
He also referred to the Central Bank’s decision in May 2026 to raise its policy interest rate by 100 basis points to 8.75%.
Karunanayake said the rate increase helped contain inflation expectations amid the Middle East energy crisis and contributed to maintaining the rupee at around Rs. 332.75 to Rs. 332.95 against the US dollar.
However, he alleged that the measures have also restricted credit expansion and placed pressure on the profit margins of local SMEs.
He warned that policies aimed at strengthening foreign exchange reserves and stabilizing the rupee could have wider consequences for businesses if access to credit remains constrained.
