Liquidity increased by Rs 7,954 million (US$ 21.92 million) during trading on Thursday (22) led by the settlement of net foreign inflows (NFIs) involving a potpourri of NFIs into the bourse, remittances and exporter conversions. Conversions are based on the benchmark, albeit administered ‘spot’ value of
Rs 362.90 to the US dollar as at Tuesday.
Government of Sri Lanka’s (GoSL) demand-pull inflationary face value money printing (FVMP) debt decreased for the second consecutive market day to yesterday, with yesterday’s value being Rs 9,026 million, thereby reducing GoSL’s FVMP debt by 0.29 per cent to Rs 3,234,764.82 million (Rs 3.2348 trillion) on Thursday, consequently marginally defraying demand-pull inflationary pressure as well.
However, the reduction in GoSL’s at least theoretical MP borrowing costs (BCs), relative to the fall in its FVMP debt, once more accelerated, with Thursday’s value being by 1.26 per cent (1,963.47 million) to Rs 153,962.40 million, due to sustained market preference to invest in risk free and high returns Treasury (T) Bills and T Bonds for the fourth consecutive market day rather than lend to the private sector, the engine of growth.
The Market was short for a record 257 market days to Thursday, with this shortfall increasing by 0.20 per cent (Rs 1,072 million) to Rs 530,108 million; thereby causing sustained rate pressure.
Meanwhile, GoSL’s highest to the 260th highest FVMP debt has been recorded in the 260 consecutive market days to Thursday. GoSL’s FVMP debt has been over Rs three trillion for a record 55 consecutive market days to Thursday due to a sustained lack of revenue.
By Paneetha Ameresekere