‘Spot’ unchanged at Rs 385/395 for 3rd Day

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The benchmark market ‘spot’ closed unchanged at Rs 385/395 to the US dollar in two way quotes for the third consecutive market day, to Thursday (12), despite continued political uncertainty, nonetheless, where demand has been killed by a mix of import bans and controls to preserve the country’s sparse foreign exchange, market sources told ‘Finance Today’.

Nonetheless, year on year to yesterday the ‘spot’ has sharply weakened by between 92.98-97.50 per cent ( Rs 185.50-195) to the dollar in two way quotes to Wednesday, thereby causing cost-push inflationary pressure as Sri Lanka is an import dependent economy.

A year ago on Wednesday 11 May 2021, the ‘spot’ was administratively controlled at Rs 199.50/200 to the dollar in two way quotes. Meanwhile, from 28 April 2021 to 9 March 2022, a unique thing happened in the country’s interbank foreign exchange (FX) market, where for the first time after the liberalisation of the economy that took place 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.

 ‘spot’ trades are settled after two market days from the date of transaction. CBSL, the steward of Government of Sri Lanka’s (GoSL’s) debt and of its foreign reserves, also deals in ‘spot’.

By Paneetha Ameresekere