Inflationary MP up Rs 614.45M
By Paneetha Ameresekere
Government of Sri Lanka’s (GoSL’s) demand pull inflationary face value money printing (FVMP) debt increased by Rs 614.45 million due to a lack of revenue during Friday’s trading, thereby on the whole increasing its FVMP debt by 0.03 per cent to Rs 1,808,058.88 million (Rs 1.8081 trillion). GoSL’s FVMP debt has been over Rs one trillion for a record consecutive 87 market days to Friday due to a lack of revenue.
GoSL’s at least theoretical MP borrowing costs sharply decreased by 7.20 per cent (Rs 3,726.48 million) to Rs 48,014.42 million due to market preference to invest in riskless, low returns Treasury (T) Bonds and T-Bills in secondary market trading on Friday, rather than lend to the private sector, the engine of growth, due to sustained uncertainty. Money market was short for the 55th consecutive market day to Friday, thereby causing persistent rate pressure, though market shortfall fell by 1.06 per cent (Rs 3, 193 million) to Rs 297,994 million on Friday.
Money market liquidity during Friday’s trading increased by Rs 2,578.55 million (US$ 12.84 million) due to the possible settlement/s of GoSL’s sales of US dollars to the Central Bank of Sri Lanka (CBSL) at Wednesday’s administered, albeit discounted ‘spot’ price of Rs 200.78 to the dollar and/or CBSL’s swaps with the market.
The interbank foreign exchange (FX) market was ‘dead’ for the 142nd consecutive market day to Friday with no outright transactions taking place, coupled with all trades in the FX market, including bank-client trades too, since midnight 6 September, mandated to be executed under a controlled exchange rate (ER) regime of between Rs 202-203 to the dollar, aiding in the spawning of a black market. Non-commercial consumer credit card trades such as for education and health may be executed at a premium of five per cent over the administered ER of Rs 203 to the dollar, leading to such trades being executed at the Rs 213-214 levels to the dollar.