NFOs Pass Rs One Billion 2nd Time in Three Days

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Bourse’s net foreign outflows (NFOs) in the calendar year passed the Rs one billion for the second time within three consecutive market days to yesterday, signifying the lack of confidence foreigners have on the market due to a combination of  the worst socioeconomic crisis the country is facing in its 74 years of independence, complemented by political instability.

Yesterday, the bourse suffered a Rs 268.9 million NFO, increasing NFOs in the calendar year to date to Rs 1.2 billion, after enjoying a net foreign inflow of (NFI) of Rs 74.3 million on the previous day, thereby reducing NFOs to Rs 974.6 million then, before suffering an NFO of Rs 62.4 million on Monday, thereby increasing NFOs to Rs one billion then.

As a pyrrhic consolation, the bourse gained for the tenth consecutive market day to yesterday, with yesterday’s gains over Tuesday being the ASPI increasing by 2.43 per cent to 8,706.17 points and the S&P SL 20 Index by 4.46 per cent to 2,928.96 points on a Rs 4.51 billion turnover.

Prior to yesterday, market indices made higher values than these were more than four months ago, ie on 5 April, where the ASPI closed at 8,738.08 points and the S&P SL 20 Index, on 31 March 2022, closing at 3,031.16 points, respectively.  

Prior to yesterday, the last time the bourse made gains for at least ten consecutive market days was nearly  one year and  seven months ago, where, for a total of 14 consecutive market days, from 24 December 2020 to 18 January 2021, the bourse, led  by a low interest rate regime made such consecutive gains.

Also, this is the first time after more than five months that the bourse has made daily turnovers of over Rs three billion for five consecutive market days to  yesterday, with  Tuesday’s figure being Rs 5.34 billion,  Monday ( Rs 3.33 billion), last Friday’s (5 August) Rs 3.75 billion and that of  last Thursday’s (Rs 3.80 billion), respectively.

The last time prior to  yesterday that the bourse made over a Rs three billion daily turnover for  a minimum of four consecutive market days, were for five consecutive market days from 23 February to 2 March, with figures of  Rs 4.52 billion, Rs 3.71 billion, Rs 4.21 billion, Rs 4.29 billion and Rs 3.07 billion, respectively.

‘Spot’ Unchanged 28th Day

The benchmark, albeit administered market “spot” closed unchanged for the twenty eighth consecutive market day at Rs 360/364 to the US dollar in two way quotes to yesterday (Wednesday, 10 August), market sources told “Finance Today.”

Yesterday, the administered market “spot” was down by between 78.22-79.31 per cent (Rs 158-161) year on year (YoY); thereby causing cost push inflationary pressure as Sri Lanka is an import dependent economy, they 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 GoSL, CBSL and or between the GoSL and/or CBSL with the market, which was fixed at Rs 360.94 to the dollar yesterday.

They further said that trades in the administered market “spot” (Rs 360/364) yesterday 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.

In like 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  80.56 per cent (Rs 161.04).

Yesterday, the value of this official administered ‘spot’ was fixed at Rs 360.94 to the dollar, while a year ago it was Rs 199.90. Meanwhile,  the straitjacketed, inflexible administered market ‘spot’ a year ago was fixed at Rs 202/203 to the dollar in two way quotes, unchanged for the twenty third consecutive market day to 10 August 2021. 

By Paneetha  Ameresekere