Guided ‘Spot’ unchanged at Rs 360/365 for 8th Day

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The guided benchmark market ‘spot’, administered since 13 May closed unchanged at Rs 360/365 to the US dollar in two way quotes for the eighth consecutive market day to yesterday, market sources told Finance Today.

They further said that trades in the administered ‘spot’ (Rs 360/365) were mainly restricted to ‘bank-client’ outright trades, while the interbank foreign exchange (FX) market was however dominated by swaps, which were outside the domain of the FX market for this purpose.

YoY as at yesterday, ie as at Thursday, 26 May 2021, this administered market ‘spot’ has weakened by between 80.23-82.27 per cent (Rs 160.25-164.75), thereby causing cost push inflationary pressure as Sri Lanka is an import dependent economy. Wednesday 26 May 2021 was a ‘Vesak’ holiday for the markets.

In related developments, the administered ‘spot’ for official purposes, YoY as at yesterday has depreciated by 80.13 per cent (Rs 159.87). Yesterday, the value of this official administered ‘spot’ was fixed at Rs 359.38 to the dollar, while a year ago it was Rs 199.51. Meanwhile, the administered market ‘spot’ a year ago was Rs 199.75/200.25 to the dollar in two way quotes.

The official administered ‘spot’ is used for transactions involving only among the GoSL, Central Bank of Sri Lanka (CBSL) and the country’s foreign reserves. It’s administered to show Sri Lanka’s foreign debt in rupee terms low, while in the case of the administered market ‘spot’, to show a lower cost of living and/or inflation. ‘spot’ trades are settled after two market days from the date of transaction. CBSL, the steward of GoSL debt and its foreign reserves deals in ‘spot’.

By Paneetha Ameresekere