The benchmark, albeit administered market ‘spot’ closed yesterday (Monday 4 July, 2022) to be trading unchanged for the second consecutive market day at Rs 360/364 to the US dollar in two way quotes, market sources told Finance Today.
However, from 21 June 2022 to Wednesday (29 June), the ‘spot’ was trading weaker at Rs 360/365 to the dollar in two-way quotes, before strengthening by a rupee to be quoted at Rs 360/364 to the dollar in two-way quotes on the following day Thursday (30 June).
They said that the strengthening of the rupee after a 10-day lapse on Thursday was led by the positive outcome that the IMF had in their discussions with the Government of Sri Lanka (GoSL), which “face to face” talks concluded on Thursday.
Meanwhile, on 20 June 2022, the administered market ‘spot’ strengthened by Rs 1 after nearly 26 months to close at Rs 359/364 to the dollar in two-way quotes due to slack demand, before weakening to Rs 360/365 to the dollar in two-way quotes the following day, 21 June and remaining that way up to Wednesday (29 June), sources said.
Prior to 20 June, the last time the exchange rate (ER) made gains was on 28 April 2021, where it was artificially strengthened by Central Bank of Sri Lanka (CBSL), by between Rs 3-4 to be trading at Rs 199/200 to the dollar in two-way quotes, where, however, trades were restricted to bank-client and not bank-bank, similar to the current state of affairs.
On 28 April 2021, the guided, market ER, like now, was the “spot,” while on the previous day 27 April, 2021, the market ER was one month’s forwards which closed at Rs 202/204 to the dollar in two way quotes.
In related developments, during this period last year, where then too the administered, made worse by an inflexible “spot” in operation, closed unchanged for the thirty second consecutive market day to Friday 2July 2021 at Rs 199.75/200.25 to the dollar in two-way quotes.
Meanwhile, yesterday, the administered market “spot” was down by between 80.23-81.77 per cent (Rs 160.25-163.75) year- on- year (YoY), thereby causing cost push inflationary pressure as Sri Lanka is an import dependent economy, sources said.
The band in which the ‘guided market spot’ may currently operate is fixed at +/- three per cent of the officially administered ‘spot’ value, where the latter is applicable for transactions involving the Government of Sri Lanka (GoSL), CBSL and or between the GoSL and/or CBSL with the market, which was fixed at Rs 359.79 to the dollar yesterday.
BY Paneetha Ameresekere