The bourse made its lowest turnover after nearly two months yesterday, with a figure of Rs 777.10 million due to the dual effects of high inflation and persistent uncertainty. A turnover lower than this was last registered on 25 April, with a figure of
Rs 265.39 million, data showed. Subsequently, shareholder wealth wiped out yesterday amounted to Rs 25.98 billion.
A high inflationary regime makes the interest rate market more attractive for investments rather than the bourse. Consequently, the ASPI and the S&P SL 20 indices fell by 0.13 and 0.58 per cent to 7,888.69 and 2,545.75 points on a share volume of 43.13 million yesterday. Meanwhile, the bourse suffered a Rs 6.10 million net foreign outflow (NFO), increasing NFOs in the calendar year to yesterday to Rs 1.12 billion.
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 nineteenth consecutive market day to yesterday, nonetheless down by between 80.23-82.27 per cent (Rs 160.25-164.75) Year-on-Year (YoY), thereby causing cost-push inflationary pressure, as Sri Lanka is an import-dependent economy, market sources told Finance Today.
The band in which the guided market ‘spot’ may operate is fixed at +/- three per cent of the administered ‘spot’ value for transactions involving the Government of Sri Lanka (GoSL), Central Bank of Sri Lanka (CBSL), and/or between the GoSL and/or CBSL with the market, which was fixed at Rs 359.83 to the US dollar yesterday.
They further said trades in the administered market ‘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, 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.
In related developments, the administered ‘spot’ for official purposes, such as for trades involving CBSL, GoSL and/or CBSL, GoSL and the market, YoY to yesterday has depreciated by 80.13 per cent (Rs 160.07).
Yesterday, the value of this official administered ‘spot’ was fixed at Rs 359.83 to the dollar, while a year ago it was Rs 199.76. Meanwhile, the straitjacketed, inflexible administered market ‘spot’ a year ago was fixed at Rs 199.75/200.25 to the dollar in two-way quotes, the eighteenth consecutive market day to yesterday, that it has remained unchanged at these levels, YoY.
The official administered ‘spot’ is currently used for transactions involving only among the GoSL, 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