Money printing over Rs 3T for record 35 days

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Government of Sri Lanka’s (GoSL’s) face value money printing  (FVMP) debt decreased for the third consecutive market day to Thursday, with  Thursday’s decline being by Rs 3,847million (0.12) per cent  to Rs 3,149,754.36 million (Rs 3.1498 trillion), thereby marginally defraying demand-pull inflationary pressure “as well.”

GoSL’s FVMP debt has been over three trillion rupees for a record consecutive 35 market days to Thursday.  Also, GoSL’s highest to the 240th highest FVMP debt has been registered for a record 240 market days to Thursday.

The country’s foreign reserves on a gross basis bled by US$ 2.47 million (Rs 890 million) led by the settlement of payments for essential imports on Thursday (25), Central Bank of Sri Lanka (CBSL) data showed. Conversions are based on the administered, benchmark “spot” value as at Tuesday which was Rs 361 to the US dollar.

Meanwhile, the fall in GoSL’s at least theoretical MP borrowing costs (BCs), relative to the decline in GoSL’s face value money printing (FVMP) debt accelerated for the third consecutive market day to Thursday, with Thursday’s change being by 1.31 per cent (Rs 1,633.95 million) to Rs 123,477.38 million led by buying pressure of Treasury (T) Bills and T Bonds in secondary market trading due to expectations of higher yields in such investments for the fourth consecutive market day.

Latest Central Bank of Sri Lanka (CBSL) data showed that while banks’ average weighted prime lending rate (AWPLR) last Friday (19 August) was 25.68 per cent, whereas  Wednesday’s (24 August) benchmark 364 day (one year) T Bill fetched a higher  weighted average yield of  29.83 per cent at the weekly T Bill auction, 415 basis points more than Friday’s AWPLR.

Market was short for a record 237 market days to Thursday,  with this shortfall increasing  by 0.75 per cent (Rs 4,737 million) to Rs 630,315 million, thereby causing  sustained rate pressure.

By Paneetha Ameresekere