Bourse Makes Pyrrhic Gains on Low Turnover

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The bourse made pyrrhic gains on a low Rs 778.67 million turnover yesterday, where the ASPI and the S&P SL 20 indices gained by 0.73 and 0.59 per cent to 7,365.92 and 2,350.28 points on a parsimonious Rs 35.03 million net foreign inflow.

However, in the calendar year to yesterday,  the bourse has suffered  a Rs 1.34 billion net foreign outflow. 34.69 million shares changed hands yesterday.

 “Spot” Unchanged

 The benchmark, albeit administered market “spot” remained unchanged to be trading at Rs 360/365 to the US dollar for the seventh consecutive market day to yesterday, market sources told “Finance Today.”

However,, yesterday, the administered market “spot” was 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, sources said.

WAYs Sharply Rise

 Central Bank of Sri Lanka (CBSL) in a bid to contain yield pressure amidst inflation running at a record over 40 per cent, sold only 36.32 per cent (Rs 33,779 million) of the original Treasury (T) Bill issue (Rs 93,000 million) at  22.6.22.’s weekly Treasury (T) Bill auction.

Consequently the weighted average yields (WAYs) of the 91, 182 and 364 day maturities remained unchanged at 20.73, 21.90 and 22.04 per cent, week on week to 22.6.22.

Subsequently CBSL sold only 49.71 per cent (Rs 19,883 million) of the original 91-day maturity (Rs 40,000 million); 23.04 per cent (Rs 5,759 million) of the original 182-day maturity (Rs 25,000 million) and 18.35 per cent (Rs 5,137 million) of the original 364-day maturity  (Rs 28,000 million), respectively, on offer at the 22.6.22. auction.

 (CBSL) on behalf of the Government of Sri Lanka (GoSL) will have to repay maturing T Bills owed to the market on Friday (1 July, 2022) of value  Rs 49,440 million the splits of the Rs 49,440 million worth of T Bill maturities repayable to the market by the coming Friday are Rs 47,652 million 91-day maturities; Rs 1,443 million 182-day maturities and Rs 345 million 364-day maturities, respectively.

 Issuing of T Bills and T Bonds is a popular method resorted to, by the GoSL to raise money domestically to meet its monetary commitments. Investments in T Bills and T Bonds are risk free, because in the event GoSL is unable to honour such debt, CBSL is mandated to print demand pull inflationary money and repay such creditors. Money printing is the sole and mandated prerogative of CBSL

By Paneetha Ameresekere