‘Spot’ moves closer to Rs 400

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The benchmark market ‘spot’ edged closer to the Rs 400 mark, falling sharply by Rs 10 for the second consecutive market day to Thursday (5), to close at Rs 380/390 to the US dollar in two way quotes, market sources told Finance Today.

Further, the ‘spot’ in the five consecutive market days to Thursday has fallen steeply by Rs 35 and year on year (YoY) by between Rs 181-190 (90.95-95 per cent) to Rs 380/390 to the dollar in two way quotes, thereby causing cost-push inflationary pressure as Sri Lanka is an import-dependent economy.

A year ago the ‘spot’ had closed administratively “stronger” at Rs 199/200 to the dollar in two-way quotes. Since 28 April 2021 to 9 March 2022, a unique thing happened in the country’s interbank FX market, where for the first time after the liberalisation of the economy on 21 July 1977, the interbank FX market went virtually dead after Central Bank of Sri Lanka (CBSL) started fixing the ‘spot’, void of hardly any CBSL intervention in the interbank FX market. However, the exchange rate was once more liberalised 11 months later on 10 March 2022.

In related developments, the administered ‘spot’ was fixed at Rs 199.59 to the dollar in two-way quotes by CBSL a year ago, compared to a weaker administered rate of Rs 349.90 to the dollar on Thursday, down 75.31 per cent (Rs 150.31) YoY.

‘Spot’ trades are settled after two market days from the date of transaction. CBSL, the steward of GoSL debt and of its foreign reserves, deals in ‘spot’. The banking regulator is also CBSL.  The ‘spot’ is administered by CBSL to show GoSL’s foreign debt in rupee terms to be of a lower value for accounting purposes, it is learnt.

By Paneetha Ameresekere