Selling pressure dominates treasuries

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Government of Sri Lanka’s (GoSL’s) at least theoretical money printing borrowing costs (MPBCs) increased by 5.91 per cent (Rs 7,463.31million) to Rs 133,851.56 million on Friday, led by selling pressure of   Treasury (T) Bills and T Bonds in secondary market trading by investors, to reinvest in tomorrow’s Rs 85 billion T Bill auction on expectation of higher yields due to inflation being at record highs.

 GoSL’s face value (FV)MP debt decreased by  0.41 per cent (Rs 12,921.38 million) to Rs 3,157,084.26 million (Rs 3.1571 trillion) on Friday, thereby marginally defraying demand-pull inflationary pressure. GoSL’s FVMP debt has been over Rs three trillion for a record consecutive 22 market days to Friday due to a perennial lack of revenue.

The country’s foreign reserves bled for the eighth consecutive market day to  Friday, with  Friday’s value alone being US$ 9.71 million (Rs 3,503.38 million), thereby increasing such haemhorraging  to US$ 283.33 million in the review period led by the settlement of payments made in relation to making “essential” imports. Central Bank of Sri Lanka’s (CBSL‘s) Friday’s data showed that the country’s foreign reserves bled by $ 39 million last month due to such commitments.

Market was short for a record 224 market days to  Friday, with this shortfall increasing for the third consecutive market day, with Friday’s increase being by 1.57 per cent (Rs 9,418 million) to 607,612 million, thereby virtually causing perpetual rate pressure. GoSL’s highest to the 227th highest FVMP debt has been registered for a record 227 market days to Friday.

By Paneetha Ameresekere