The benchmark market ‘spot’ held yesterday, to close unchanged at Rs 345/355 to the US dollar in two way quotes in interbank foreign exchange (FX) trading amidst sustained uncertainty, market sources told Finance Today.
However, year on year (YoY) to yesterday the market exchange rate (MER) has weakened by between Rs 143-151 (70.79-74.02 per cent), having closed stronger at Rs 202/204 to the dollar in two way quotes on one month’s forwards on Friday 23 April 2021, thereby causing cost-push inflationary pressure as Sri Lanka is an import dependent economy. Monday, 26 April 2021 was a Poya holiday to the market.
Meanwhile, the administered spot was fixed at Rs 191.94 to the dollar in two way quotes by CBSL a year ago, compared to a weaker administered rate of Rs 340.47 to the dollar yesterday, down 77.38 per cent (Rs 148.53) YoY.
Rs 2.55 trillion or 46.5 per cent of shareholder wealth was wiped out in the calendar year to yesterday consequent to the bourse declining for the fifth consecutive market day, with the ASPI suffering its sharpest fall in its history, by 8.18 per cent to 6,905.37 points, a one year and four month low, due to sustained uncertainty complemented by over 20 per cent inflation.
High inflation leads to high interest rates, making the fixed income market more attractive than the bourse.
Subsequently the S&P SL 20 Index suffered its second highest decline, falling by 9.75 per cent to 2,125.96 points yesterday, a near two year low. Resultantly the bourse made its third lowest turnover in over a year and a month, a figure of Rs 800.42 million on a share volume of 91.78 million yesterday.
Trading hours too have been drastically cut these days, from the normal five hours to at least two hours due to the bourse’s sharp daily declines coupled with power cuts. Prior to yesterday, the sharpest fall the bourse suffered is a decline of 7.64 per cent which took place on Monday, while the sharpest fall the S&P has fallen is a decline of 10.23 per cent which also took place on Monday.
Meanwhile, a figure lower than 6,905.37 points which the ASPI suffered last was on 31 December 2020 with a number of 6,774.22 points and the S&P, a lower figure than 2,125.96 points on 15 July 2020 with a figure of 2,122.94 points, respectively.
In related developments, the lowest and second lowest turnover figures the bourse has made in the past one year and two months are Rs 265.39 million on Monday and Rs 657.98 million on 10 March 2021 respectively.
By Paneetha Ameresekere