Thursday Markets: FVMP debt over Rs 0.5T for 150 days
By Paneetha Ameresekere
Government of Sri Lanka’s (GoSL’s) face value money printing (FVMP) debt increased for the fifth consecutive market day, with its non-demand pull inflationary FVMP debt increasing by Rs 3,160 million yesterday and its overall FVMP debt by 0.35 per cent (Rs 913,570.37 million). GoSL’s FVMP debt has been over Rs 0.5 trillion for a record 150 consecutive market days to yesterday due to lack of revenue.
GoSL’s money printing borrowing costs (MPBCs) sharply decreased for the second consecutive market day, with yesterday’s figure being 0.66 per cent (Rs 141.25 million) to Rs 21,203.43 million due to investor preference for low value, riskless Treasury (T) Bonds and T-Bills in secondary market trading rather than lend to the lucrative private sector, the engine of growth, because of sustained uncertainty.
Liquidity decreased for the fifth consecutive market day, yesterday by Rs 5,974 million (US$ 29.94 million) led by the settlement/s of GoSL’s foreign debt servicing commitments and/or Central Bank of Sri Lanka’s (CBSL’s) swaps with the market and/or CBSL’s US dollar sales to and/or swaps with GoSL during trading. Transactions between GoSL and CBSL are foreign reserves neutral. Conversions are based on CBSL’s administered ‘spot’ on Tuesday which was Rs 199.50 to the dollar.
CBSL lacks transparency in its daily ‘open market operations’ statements. Net excess liquidity decreased by 3.41per cent (Rs 2,814 million) to Rs 79,804 million at the end of yesterday’s trading. The benchmark administered ‘spot’ was ipso facto unchanged at Rs 199.75/200.25 to the dollar for the 22nd consecutive market day to yesterday in the interbank foreign exchange (FX) market with no trades done, led by moral suasion.