Wednesday Markets: NFOs Top: Rs 1.86B

By Paneetha Ameresekere | Published: 2:00 AM Jan 13 2022

By Paneetha  Ameresekere

The bourse suffered net foreign outflows (NFOs) for the fifth consecutive market day to yesterday, this time by Rs 117.80 million, due to sustained uncertainty, increasing NFOs in the calendar year which has experienced only eight market days to Rs 1.86 billion.

However, this and other repatriable proceeds, comprising a grand total of US$ 400 million, are stuck with such repatriation slowed down, due to the country’s US dollar shortage, market sources told this reporter.

Last year, due to similar uncertainty, the bourse suffered a record Rs 52.57 billion worth of NFOs and in the previous year 2020, its second highest, Rs 51.04 billion, increasing NFOs in the two years to end 2021 to a record Rs 103.61 billion.

Subsequently, the more sensitive S&P SL 20 Index fell for the third consecutive market day to yesterday, this time by 0.62 per cent to 4,4490.83 points, though the common or garden ASPI  gained by 0.33 per cent to 13,122.95 points and on a Rs 7.71 billion turnover and on a 317.31 million share volume. 

The initial public offering (IPO) of Hela Apparel Holdings Ltd., through an offer for subscription of 267,108,998 shares at a price of Rs 15 per share, which opened yesterday, was oversubscribed on the initial day itself, the bourse said.

 Sri Lanka may negotiate a new Chinese loan which can be used to make loan repayments due to China after President Gotabaya Rajapaksa asked visiting Foreign Minister for debt assistance, Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal said.

$112.80M Haemorrhage

Yesterday, market liquidity  fell by Rs 22,775 million (US$ 112.80 million) due to Government of Sri Lanka’s (GoSL’s)  foreign debt servicing commitments and the import of essential items met from the country’s foreign reserves at the discounted, administered, “benchmark”  “spot” rate of Rs 201.90 to the  US dollar as at  Monday. 

CBSL is nontransparent in its open market operations. Government of Sri Lanka (GoSL) has to settle a $ 500 million maturing international sovereign bond (ISB) on Tuesday (18 January).

GoSL’s at least theoretical money printing borrowing costs (MPBCs) declined for the third consecutive market day to yesterday, this time sharply by 12.03 per cent (Rs 5, 255.48 million) to Rs 38,423.67 million yesterday due to sustained buying pressure of riskless, low returns Treasury (T) Bonds and T Bills in secondary market trading, rather than invest in the lucrative private sector the engine of growth due to sustained uncertainty.

GoSL’s face value MP (FVMP) debt fell by 0.11 per cent (Rs 2,065 million) to Rs 1,928,755.55 million (Rs 1.9288 trillion) yesterday, thereby marginally defraying demand pull inflationary pressure.

 Money market was short for the 88th consecutive market day to yesterday, with this shortfall increasing by 5.86 per cent (Rs 24,840 million) to Rs 448,954 million yesterday,  causing nagging rate pressure.

GoSL’s FVMP debt has been over Rs one trillion for a record consecutive 120 market days to yesterday.  Also, GoSL’s highest to the ninety first highest FVMP debt has been registered in the 93 consecutive market days to yesterday, though not necessarily in a particular order.

Dead 175 Days

The interbank foreign exchange (FX) market was ‘dead’ for the 175th consecutive market day to yesterday, with no outright transactions of worth 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.  

Meanwhile in the black market, the dollar was being traded at Rs 250 a unit, sources told this reporter recently (5 December 2021), a year on year depreciation of  Rs 56.50 (29.20 per cent). A weak ER causes cost push inflationary pressure as Sri Lanka is an import dependent economy.

A year ago, in the interbank FX market, due to “milder” controls, the market ER which was from “spot next” to one month forwards was trading in a superimposed fashion of Rs 192.50/193.50 to the dollar in two way quotes.”Spot” trades are settled after two market days from the date of transaction and “spot next” in three. 

By Paneetha Ameresekere | Published: 2:00 AM Jan 13 2022

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