Wednesday Markets: NFOs record 189 days

By Paneetha Ameresekere | Published: 2:00 AM Dec 2 2021

By Paneetha Ameresekere

Net foreign outflows (NFOs) from the bourse registered a record 189 calendar days to yesterday due to sustained uncertainty, beating the previous record of 188 days established last year Consequently the bourse suffered NFOs for the 14th consecutive market day to yesterday with a figure of Rs 55.56 million, increasing NFOs in the calendar year to date to Rs 50.28 billion, the second highest in the bourse’s 125 year history, the highest being Rs 50.04 billion established last year due to similar uncertainty . 

In the 218 market days that have transpired in the calendar year to yesterday, the bourse has suffered NFOs in 86.70 per cent of those days, which is also the second highest ever NFOs the bourse has suffered in percentage terms, with the highest being last year where it suffered NFOs in 90.82 per cent of the market days (207) that transpired that year.

Consequently, the benchmark  ASPI fell by 0.27 per cent to 11,409.88 points, though the so-called sensitive S&P SL 20 Index increased by 0.77 per cent to 3,905.65 points on a Rs 11.08 billion turnover and on a 402.01 million share volume, yesterday.

FVMP Debt Rs 1.80 Trillion

Government of Sri Lanka’s (GoSL’s)  face value  money printing (FVMP) debt decreased by Rs38,863 million (2.12 per cent) to Rs 1,796,024.88 million (Rs 1.7960 trillion) yesterday. 

 GoSL’s FVMP debt has been over Rs one trillion for a record consecutive 90 market days to yesterday due to a lack of revenue.

GoSL’s at least theoretical MP borrowing costs fell for the fourth consecutive market day to yesterday, this time by 0.88 per cent (Rs 409.75 million) to Rs 45,905.24 million yesterday.

Money market was short for the 58th consecutive market day to yesterday, thereby causing persistent rate pressure, though market shortfall decreased by 3.96 per cent (Rs 11,972 million) to Rs 290,331 million. 

Money market liquidity during  yesterday’s trading increased by Rs 50,835 million (US$ 251.96 million), vis-à-vis, at the discounted, albeit ‘spot’ price of Rs 201.76 to the US dollar due to the possible settlement/s of GoSL’s  dollar swaps with/ sales to Central Bank of Sri Lanka (CBSL’s) and/or CBSL’s swaps with the market. 

CBSL’s open market operations (OMO) data don’t capture transactions between CBSL and other central banks, Asian Clearing Union and the IMF. Transactions between GoSL and CBSL are foreign reserves neutral.  CBSL is not transparent in its OMO data. 

Dead 145 days 

The interbank foreign exchange (FX) market was ‘dead’ for the 145th consecutive market day to yesterday 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.

Commercial trades with  approvals, which may involve the passing of speed money have to be executed at the administered and discounted price of Rs 203 to the dollar, after, apparently dipping into the country’s Spartan foreign reserves, to meet such commitments.

 At the controlled ER of Rs 203, the ER will have had depreciated by 7.69 per cent (Rs 14.50) in the calendar year to  yesterday (Wednesday) and  year on year by between 9.52-8.91 per cent (Rs 17.65-16.60) to the dollar, respectively.

 Due to milder controls a year ago where the market operated a dual exchange rate regime, the administered ‘spot’ and the ‘spot next,’ respectively, with their respective values being  Rs 185.00/35 and Rs 186.10/40 to the dollar in two way quotes, then.

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

By Paneetha Ameresekere | Published: 2:00 AM Dec 2 2021

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