‘Spot’ down for 3rd day

By Paneetha Ameresekere 

The benchmark ‘spot’ fell sharply for the third consecutive market day yesterday, this time by 25 cents, to be trading at Rs 185.50/70 to the US dollar in two-way quotes at 4p.m. on expectations of a rupee devaluation at yesterday’s budget.

The rupee devaluation was being done to protect the country’s Spartan foreign reserves, whilst simultaneously liberating the country from exchange controls and import bans which have been a feature since April, market sources told Ceylon FT.

In the three market days to 4 p.m. yesterday the ‘spot’ has fallen by between 92 and 107 cents (0.51-0.58 per cent and in the calendar year to 4p.m. yesterday by between Rs 4.20 to Rs 4.30 (2.32 per cent-2.37 per cent) in two-way quotes.

Meanwhile, Government of Sri Lanka’s (GoSL’s) face value money printing (FVMP) debt  decreased by 1.75 per cent (Rs 10,000 million) to Rs 560,966.87 million yesterday, thereby in part mitigating demand pull inflationary pressure.

However, yesterday was the 11th consecutive market day that GoSL’s FVMP debt has been over the Rupees half-a-trillion mark due to a sustained lack of revenue, in its second dispensation, after only a day’s respite on 2 November when it went below the Rupees half-a-trillion mark, then. 

In related developments, due to the settlement of a GoSL sale of dollars to  Central Bank of Sri Lanka (CBSL) and/or due to CBSL swapping rupees for dollars from the market, liquidity was uplifted by Rs 11,665 million (US$ 63.14 million) during trading yesterday. 

Conversions are based on the middle rate of the ‘spot’ as at 4p.m. on Friday which was Rs 184.75 to the dollar. Transactions between the GoSL and CBSL are foreign reserves neutral.

Consequently GoSL’s MP borrowing costs (BCs)   decreased by 0.44 per cent (Rs 75.76 million) to Rs 17,322.34 million yesterday, led by a decrease in CBSL’s Treasury (T) Bills and T Bond holdings. 

However, the market’s net excess liquidity increased by 1.05 per cent (Rs 1,665 million) to Rs 160,547 million  yesterday, led by the aforesaid external transactions.