Reserves Fall $176.72M

By Paneetha Ameresekere

The country’s foreign reserves bled by US$ 148.18 million (Rs 28,524 million) yesterday (13) haemorrhaging for the third consecutive market day, increasing such bleeding with yesterday’s figure being US$ 23.13 million (Rs 4,430 million). 

Conversions are based on the middle rate of the derived ‘spot’ as at Friday which was Rs 191.50 to the US dollar.

In the three market days to yesterday, reserves have bled by US$ 176.72 million (Rs 33,974 million). Haemorrhaging of the country’s foreign reserves  have to be looked at in the context that reserves are already at a 43-month low at US$5,555.30 million as at end November 2020, according to latest data.

Decline in the country’s foreign reserves are due to the settlement/s of Central Bank of Sri Lanka’s (CBSL’s) defence of the rupee in the  foreign exchange (FX) market and/or due Government of Sri Lanka’s (GoSL’s) foreign debt servicing commitments and/or due to CBSL returning maturing swapped dollars to the market. 

In related developments, GoSL’s money printing borrowing costs (MPBCs) sharply fell for the eighth consecutive market day to yesterday; this time too, steeply, by 0.898 per cent (Rs 134.521 million) to Rs 15,026.56 million. 

This fall has to be looked at in the context that GoSL’s face value (FV) MP debt remained unchanged at Rs 731,246.88 million for the third consecutive market day to yesterday. 

Meanwhile, GoSL’s face value (FV) MP debt has been above Rs 0.5 trillion for a record 50 consecutive market days in its second dispensation to  yesterday due to a lack of GoSL revenue.

In the FX market, ‘spot next’ and up to one month’s forwards, the most popular FX instrument these days and also including the derived spot days due to controls on the benchmark spot, fell by a rupee due to uncertainty to be trading at Rs 193.50/194.50 to the dollar in two way quotes as at 4pm yesterday, sources told Ceylon FT.

Year on year  as at yesterday, the exchange rate  has sharply fallen by between Rs 12.00-12.90 (6.61-7.10 per cent) in two way quotes thereby causing cost-push inflationary pressure as Sri Lanka is an import dependent economy. 

Meanwhile, the persistent spread of 100 cents between the ‘buy’ and ‘sell’ quotes of the ER is a reflection of the uncertainty pervading the FX market currently, sources said.

The ‘spot’ is controlled to minimize GoSL’s foreign debt in rupee terms. Consequently net excess liquidity declined by 12.25 per cent to Rs 204,375 million yesterday.