Reserves bleed USD 45 M

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The country’s foreign reserves haemorrhaged by USD 45.09 million (Rs 16,273 million) on Wednesday (17 August) led by the settlement of payments made in respect of ‘essential’ imports. Conversions are based on the administered value of the benchmark ‘spot’ which was Rs 360.92 to the US dollar on Monday (15 August). Last month due to such commitments the country’s reserves on a gross basis bled by $ 276.58 million, Central Bank of Sri Lanka’s (CBSL’s) Friday’s (12 August) data showed.

 Government of Sri Lanka’s (GoSL’s) at least theoretical money printing borrowing costs (MPBCs) sharply decreased for the third consecutive market day to Wednesday, with Wednesday’s fall being by 1.30 per cent (Rs 1,606.48 million) to Rs 121,843.81 million; led by continuous investor buying pressure of high yielding Treasury (T) Bills and T Bonds in secondary market trading, rather than lend to the private sector, the engine of growth.  On Wednesday, the Monetary Board kept CBSL’s policy rates unchanged.

  GoSL’s face value (FV) MP debt increased by 0.25 per cent (Rs 7,882 million) to Rs 3,143,412 million (Rs 3.1434 trillion) on Wednesday due to a sustained lack of revenue. This increase was however non-demand pull inflationary as it was used to meet the above external commitment.  GoSL’s FVMP debt has been over Rs three trillion for a record consecutive 29 market days to Wednesday due to a perennial lack of revenue. Also, GoSL’s highest to the 234th highest FVMP debt has been registered for a record 234 market days to Wednesday.

Market was short for a record 231 market days to Wednesday,  with this shortfall increasing  by 1.44 per cent (Rs 8,391 million) to 592,903 million,  virtually causing perpetual rate pressure.

By Paneetha Ameresekere