Buying Pressure on Treasuries Persists for 3rd Day

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Government of Sri Lanka’s (GoSL’s) face value money printing (FVMP) debt decreased for the second consecutive market day to Wednesday (10), with Wednesday’s fall being by 0.20 per cent (Rs 6,239 million) to Rs 3,139,842.26 million (Rs 3.1398 trillion), thereby marginally defraying demand pull inflationary pressure. Nonetheless, GoSL’s FVMP debt has been over three trillion rupees for a record consecutive 25 market days to Wednesday due to a perennial lack of revenue.

 GoSL’s at least theoretical MP borrowing costs (BCs), decreased for the third consecutive market day to Wednesday, with Wednesday’s decline, relative to the fall in its FVMP debt, decreasing faster for the second consecutive market day, this time by 0.72 per cent (Rs  912 million) to Rs 125,763.53 million, led by  buying pressure of riskless and now, high  yielding (T) Bills and T Bonds in secondary market trading by investors, over preference to lend to the private sector, the engine of growth.

Liquidity was enhanced by Rs 14,015 million (US$ 38.84 million) on Wednesday, led by the settlement of transactions between the GoSL and the Central Bank of Sri Lanka (CBSL). Conversions are based on the administered value of the benchmark “spot” which was Rs 360.80 to the dollar on Monday.

Market was short for a record 227 market days to Wednesday, though  it fell  for the third consecutive market day, with Wednesday’s decrease being by 1.30 per cent (Rs 7,776 million) to 589,173 million, nonetheless,  virtually causing perpetual rate pressure. GoSL’s highest to the 230th highest FVMP debt has been registered for a record 230 market days to Wednesday.

By Paneetha Ameresekere