Wednesday Markets: CBSL administers ‘Spot’ at Rs199/200 to $
By Paneetha Ameresekere
Central Bank of Sri Lanka (CBSL)/Government of Sri Lanka (GoSL) came down hard on banks to artificially appreciate the exchange rate, paradoxically amidst depreciative pressure led by sustained uncertainty, which saw the benchmark ‘spot’ academically quoted at the Rs 199/200 levels to the US Dollar in two-way quotes at 4 p.m. yesterday (28) with no trades however been executed, market sources told this reporter.
They said that the reason why no trades were done even at the Rs 199/200 levels to the Dollar yesterday was because importers felt that by anticipated further moral suasion by the CBSL/GoSL, that there was room for such an administered ‘spot’ to strengthen further.
On Tuesday (27), the market exchange rate (MER) in interbank trading which was one month’s forwards for the fifth consecutive market day then, due to CBSL’s/GoSL’s controls on the ‘shorter’ tenures in a bid to curb demand-pull inflationary pressure and the rupee cost of GoSL’s foreign debt, was trading unchanged for the fourth consecutive market day at Rs 202/204 to the Dollar in two way quotes at 4 p.m., sources said.
Bourse suffers Rs 20.22B NFOs
The bourse saw net foreign outflows (NFOs) in the calendar year to yesterday increasing to Rs 20.22 billion, with yesterday’s figure been Rs 60.81 million. In the 74 market days that have passed in the calendar year to yesterday, the bourse has suffered NFOs in 67 of those days (90.54 per cent).
Last year, in the 207 market days that it saw; the bourse suffered NFOs for a record 188 (90.82 per cent) of those days. Further, last year the bourse also suffered a record Rs 50.94 billion worth of NFOs due to sustained uncertainty.
Nonetheless, the bourse made pyrrhic gains yesterday, with the benchmark ASPI gaining by 2.45 per cent to 7,239.94 points and the more sensitive S&PSL20 Index by 2.74 per cent to 2,878.80 points on a Rs 2.17 billion turnover and on a share volume of 107.30million.
MPBCs fall due to uncertainty
T-Bill Auction - 8-in-a-row
Yesterday’s weekly riskless low value Treasury (T) Bill primary auction for the sale of Rs 45 billion Treasuries was an eight-in-a-row failure led by the ‘long term’ 364-day and the ‘medium’ term 182-day maturities with monotonous regularity once more, where only 9.86 per cent (Rs 1,775 million) and 22.41 per cent
(Rs 4,034 million) of the respective original parcels up for sale were allowed to be bought by the market due to higher yields asked because of a combination of inflationary pressure and persistent uncertainty.
CBSL/GoSL wants to artificially maintain a low interest rate regime to spur growth.
Consequently, only 66.43 per cent (Rs 29,894 million) of the total parcel was allowed to be sold, led once more by the 91-day maturity where 267.61 per cent (Rs 24,085 million) compared to the original parcel of a mere Rs 9,000 million on offer for sale was sold to the market at a maximum administered yield (MAY) of 5.11 per cent, up one basis point (bp) week on week (WoW) to yesterday, leading to the continuance of a situation where GoSL borrows ‘short’ to repay maturing ‘long-term’ (182 and 364 day) debt.
Meanwhile, the MAY fixed/fetched by the 364 day tenure yesterday was 5.18 per cent, unchanged WoW. The MAY fetched/fixed for the 182 day tenure at yesterday’s auction was 5.14 per cent, up one bp.