IMF Deal No Help to Rupee

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The IMF Staff Agreement deal of US$ 2.9 billion announced yesterday (1) brought no succor to the ‘spot’ which closed unchanged for the forty-third consecutive market day at Rs 360/364 to the US dollar in two-way quotes to yesterday (31 August), market sources told Finance Today.

Consequently, 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.

 Meanwhile, yesterday, the value of this official administered ‘spot’ was fixed at Rs 361.08 to the Dollar, while a year ago it was fixed at Rs 210, down 71.94 per cent (Rs 151.08), YoY. In related developments,  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  eighth consecutive market day to  1 September 2021.

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 361.08 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.

 ‘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 in ‘spot’.

By Paneetha Ameresekere