Inflation, Import Ban, Hit Bourse

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The bourse fell for the second consecutive market day to yesterday (24), egged down by high inflation and the Government’s latest import ban effective from Tuesday, which further stultifies trading and manufacturing.

Consequently, the ASPI, yesterday over Tuesday (23) fell by 0.66 per cent to 9.011.24 points and the S&P SL 20 Index by 1.51 per cent to 2,944.50 points on a Rs 2.55 billion turnover.  Yesterday was the first time after six calendar days that the bourse made a turnover of under three billion rupees. Yesterday was also the first time after five calendar days that the ASPI returned a lower figure than 9.011.24 points, while the last time that the S&P SL 20 Index made a lower value than 2,944.50 points was 14 calendar days ago.

Also, market capitalisation slipped under the Rs four trillion mark for the first time after six calendar days yesterday, recording a figure of Rs 3.97 trillion yesterday. Nonetheless, as a consolation, the bourse enjoyed net foreign inflows (NFIs), albeit nominal, for seven consecutive market days to  yesterday after 30 calendar days, with yesterday’s value being Rs 68.9 million. However, in the calendar year to yesterday it has suffered a net foreign outflow of Rs 1,026.8 million.  Prior to yesterday, the last time the bourse enjoyed NFIs for at least seven consecutive market days was from 14 July to 25 July, where, for eight consecutive market days in the review period, it enjoyed NFIs. Yesterday saw a total of 115.99 million shares changing hands.

‘Spot’ Unchanged for 37th Day

The benchmark, albeit administered market ‘spot’ closed unchanged for the thirty seventh consecutive market day at Rs 360/364 to the US dollar in two way quotes to yesterday (Wednesday 24 August), market sources told ‘Ceylon Today’.

In related developments, during this period last year, where then too the administered, made worse by an inflexible market ‘spot’ in operation, that closed unchanged for the thirty second consecutive market day to 24 August 2021 at Rs 202/203 to the dollar in two way quotes. 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 361 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 had depreciated by  80.59 per cent (Rs 161.10).

Yesterday, the value of this official administered ‘spot’ was fixed at Rs 361 to the dollar, while a year ago it was fixed at 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 thirty second consecutive market day to  24 August 2021. 

‘Spot’ trades are settled after two market days from the date of transaction. CBSL, the steward of GoSL debt and of its foreign reserves also deals ‘spot’.

BY Paneetha Ameresekere