‘Spot’ weakens to Rs 340/350

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The benchmark market ‘spot’ weakened to close at Rs 340/350 to the US dollar in two way quotes in interbank foreign exchange (FX) trading amidst sustained uncertainty on Friday, over its previous day Thursday’s close of Rs 340/345 to the dollar in two way quotes, market sources told ‘Finance Today’.

Year on year (YoY) to Friday the ‘spot’ has weakened by between Rs138 -146 (68.32-71.57 per cent), having closed stronger at Rs 202/204 to the dollar in two way quotes on 22 April 2021, thereby causing cost-push inflationary pressure as Sri Lanka is an import dependent economy.

Meanwhile, the administered ‘spot’ was fixed at Rs 192 to the dollar in two way quotes by CBSL, a year ago, compared to a weaker administered rate of Rs 334.80 on Friday, down 74.38 per cent
(Rs 142.80) YoY.

 Government of Sri Lanka’s (GoSL’s) demand pull inflationary face value money printing (FVMP) debt increased by Rs 9,347 million and as a whole by Rs 33,932.16 million (1.26 per cent) to
Rs 2,718,569.34 million (Rs 2.7186 trillion) on Friday due to a persistent lack of revenue.

The country’s foreign reserves bled by US$ 79.31 million
(Rs 24,585.16 million) on Friday  led by GoSL’s foreign debt servicing commitments to multilateral agencies and for ‘essential’ ports at Wednesday’s administered benchmark ‘spot’ value of Rs 310 to the dollar.

GoSL’s at least theoretical MP borrowing costs (BCs) sharply increased by 27 per cent (Rs 27,128.65 million) to Rs 127,591.68 million on Friday due to selling pressure of Treasury (T) Bills and
T Bonds in secondary market trading in order to reinvest the accrued proceeds at the coming Wednesday’s (27 April) Rs 87.5 billion T Bill auction with expectations of higher yields backed by over 20 per cent inflation.

Money market was short for a record consecutive 152 market days to  Friday due to a sustained lack of (GoSL) revenue ,  though this shortfall decreased by 1.30 per cent (Rs 9,347 million) to
Rs 709,109 million, nonetheless causing almost perennial rate pressure, CBSL data showed.

GoSL’s FVMP debt has been over Rs two trillion for a record consecutive 62 market days to Friday. GoSL’s highest to the 156th highest FVMP debt has been registered in the 156 consecutive market days to Friday, though not necessarily in a particular order. 

By Paneetha Ameresekere