GoSL’s interest cost down 42% to Rs 5.8B
By Paneetha Ameresekere
Central Bank of Sri Lanka (CBSL) yesterday retired 2.9% (Rs10, 687 million) of its Treasury (T)-Bill holdings, thereby bringing down the same (money printing) to Rs 356,918.6 million during the course of the day's trading, data showed.
As per available CBSL data, CBSL's face value (FV) T Bill holdings, after taking into account maturing overnight repos of the previous market day (Friday, 6 January) and the settlement of outright sale of T-Bills (Rs 2.4 billion) of yesterday, were uplifted to Rs 367,605.65 million by yesterday morning.
In related developments, money printing (inclusive of Government of Sri Lanka's (GoSL's) interest cost because of such activities) as at the end of the previous market day's trading, as reflected by CBSL's FV T-Bill holdings then, plus Friday's overnight repos minus the previous day's standing lending facility value (SLFV) threw up a figure of Rs 366,202.65 million.
As a result of these developments, GoSL's interest cost on account of CBSL's face value (FV) T-Bill holdings as of yesterday evening, declined by a massive 42.33% (Rs 4,240.88 million) to Rs 5,777.6 million, data showed.
The money market also suffered a net excess liquidity drawdown of Rs 9,626 million (US$ 64.17 million) probably due to the protection of the rupee at the sacrifice of CBSL's foreign reserves and the money market's excess liquidity, actuated by foreign exits from the government securities market and/or GoSL's foreign debt servicing commitments.
Meanwhile, CBSL's FV T-Bill holdings at the end of the day's trading, without taking into account repos and SLFV stood at Rs 306,963.65 million, down Rs 2,400 million from the previous day's figure of Rs 309,363.65 million.
Money market's net, excess liquidity, threw up a figure of Rs 66,796 million, down from the previous day's figure of Rs 78,823 million.
Meanwhile, money market's excess liquidity, after taking into account the aforesaid outright sale of......T-Bills will have been diluted to
Rs 76,423 million by yesterday morning from the previous market day's closing figure of
Rs 78,823 million. In this instance, the maturing overnight repos of Rs 60,642 million had already been taken into account on the previous market day's (Friday 6 January) calculation of net excess liquidity.
ER down Rs 150.45/50
The exchange rate (ER) continued to depreciate in the foreign exchange (FX) market due to rising demand, by between five cents and 30 cents to close yesterday at Rs 150.45/50 to the US dollar in two-way quotes in one week's forwards, market sources told this reporter.
While one market source told this reporter that on Friday (6 January) the ER finished last week stronger, gaining by between 10 and 15 cents over the previous day Thursday's closing figure to close at Rs 150.20 to the US dollar in interbank one week's forwards, another source said that it fell by 10 cents to close last week at Rs 150.30/45 in two-way quotes to the US dollar in interbank one week's forwards, trading.
The difference in values is due to the fact that one bank's quote may be different to another's, where, in the final analysis an average should be given by the authorities.
However, CBSL does not throw up such interbank averages, other than averages pertaining to Colombo banks' buying and selling rates of selected foreign currencies (including the US dollar) as at 9.30 a.m. for telegraphic transfer on a daily market day basis.
Meanwhile, the spot is administered at Rs 150 to the dollar, thereby making the market deal in one week's forwards for price discovery. 'Spot' trades are settled after two market days from the date of transaction.
NFOs pass Rs 1B...
In other developments, net foreign outflows (NFOs) in the stock market passed the Rs one billion mark in the calendar year to date, in only the sixth market day of trading in the new year.
The bourse recorded a Rs 152.65 million NFO yesterday, taking NFOs for the new year to a thumping Rs 1.12 billion.
The stock market is bogged down by the twin evils of rising rates due to a lack of inflows and foreign exits to US based assets because of the uplift in interest rates in the world's largest economy. In the backdrop of the global financial crisis in 2007, the Federal Reserve System kept its benchmark policy rate, the Fed funds rate (FFR) virtually at zero levels to boost the economy, before raising it eight years later, by 25 basis points (bps) to be between 25- 50bps in December 2015 due to the recovery of the US economy, and, after another 12-month hiatus, again by another 25 bps last month, for the FFR to be currently at between 50-75 bps. The possibility of rising interest rates in the USA has been given a further fillip due to President Elect Donald Trump's campaign pledges. Those include protectionism, infrastructure spending, tax waivers and deregulation, all of which will give a boost to uplift inflation if implemented. As a result, the Fed is expected to hike the FFR at least thrice this year.
Further, these developments have also resulted in foreign funds exiting from markets such as Sri Lanka and re-parking in US based assets for 'better' returns. These developments have resulted in bringing down the stock market, while at the same time causing downward pressure on the rupee. Also, rising interest rates in the local market have induced local investors to exit from the bourse and re-park their assets in the fixed income market for better returns, thereby delivering a double blow to the local stock market.
In related developments, the stock market continued to make pyrrhic gains for the second consecutive market day yesterday, led by JKH, the market's largest capitalized stock and Chevron, its twelfth largest.
These two stocks, together with Nestle, the market's fourth largest capitalized stock, were the only three stocks to enter the Rs 100 million turnover club at yesterday's trading, contributing 67.01% to the total turnover of Rs 844.05 million. JKH led the way with a Rs 280.59 million turnover, followed by Chevron (Rs 184.44 million) and Nestle (Rs 100.31 million).
The stock market made a total turnover of Rs 844.05 million at yesterday's trading.
The number of JKH's shares traded was 1.99 million, Chevron 1.18 million and Nestle 50,154.
JKH share value (SVa) closed, up 0.28% at Rs 141.40 a share and that of Chevron, up 1.94% at Rs 158 a share. As the movement of market indices is intrinsically linked to market capitalization (MC), when the SVas of indices such as Chevron and JKH gain, then, not only do their individual MCs, but also the market's overall capitalization too gains.
However, SVa of Nestle's marginally fell by 0.03% to Rs 2,000 a share at yesterday's trading.
Meanwhile, the single biggest contributor to yesterday's share volume (SV) was Dunamis Capital, a Janashakthi/Chandra Schaffter company. Dunamis, on a 3.01 million SV, made a Rs 82.81 million turnover. Dunamis' shares closed, up 4.74% at Rs 24.30 a share. Dunamis was the fourth biggest contributor to yesterday's total turnover.
Number of gainers was 66 and losers 56.
The Colombo Stock Exchange (CSE) has thrown a seemingly improbable figure of 317.93 million, as the number of shares that were traded yesterday. As this is seemingly impossible going by yesterday's trading, this figure may be discarded.
As such, the local markets may have to settle themselves to a bleak future of no respite to the rupee being plagued by sharp, depreciative pressure this year, the bourse having a parlous year and local interest rates being on the rise.
Yesterday's T Bond auction saw the Government of Sri Lanka borrowing a sum of Rs 54,976 million from the market, marginally less than the original, earmarked figure of Rs 55,000 million.
- China to provide 90 water bowsers worth Rs 1b 2096
- Wag the Dog 2120
- A brief look at FARC’s origins in Colombia 2061
- ‘Panama Papers’ bags Pulitzer 2074
- SAITM will cooperate with Govt 2085
- dead man was near fashion mall 2117
- Japanese MPs back Lanka’s development 2086
- CB Bond earnings whitewashed – JVP 2097
- Talks to extend Lanka’s Continental Shelf 2086
- Ex-DIG and son re-remanded 2098
- Government can be sent home 2631
- GMOA flogging SAITM for Mahinda– Rajitha 2094
- Ranil invites Japan to invest in S. Asia 2083
- Somali Pirates’ Captives Back Home 2085
- Customs in Rs 8 M bust 2088
- May Day Rally …or the Boot ! 2060
- Auspicious Times presented to President 2067
- Johnston sacked SLFP reshuffles K’gala 2890
- Singapore in the crossfire 2962
- Park impeachment and SK foreign policy 2916
- Filipino Oconer wins overall title 1724
- Unsporty conduct by Joes 1759
- Bertie Wijesinghe, pre-Test era Sri Lankan cricketer, dies aged 96 1741
- CEAT revs up for 2017 1725
- Palace shock Arsenal 1722
- Argentina fire coach Bauza 1732
- BCCI postpones SGM to 18 April 1723
- Murray returns from injury 1719
- New mum Azarenka to return to WTA 1710
- Galle win by 188 runs 1707
- Kapugedera ton boosts Kandy 1689
- Pakistan charges Jamshed in spot-fixing case 1686
- IAAF clears seven more Russians to compete 1685
- Game evenly poised 1682
- Saumy Zainab wins Championship 1730
- Keeping Cool 1729
- Do the right thing and do it now! 1730
- Ravi Jayewardene Pious son of a political giant 2299
- Minorities’ frustration a powder keg – VIDURA 2069
- Administrative powers a must for the Plantation Tamils –Radhakrishnan 1322
- Rajapaksa sought advice from McGuinness– Indika Perera 2416
- SilkAir launches direct flights to Colombo 1758
- Rupee falls on thin volumes 1722
- SriLankan, Japan Airlines add new routes 1745
- Colombo Port box volume up 5.6-pct in Jan 1725
- Private sector to transform into main domestic growth engine 1744
- Oil eases from 5-week top, rising US production weighs 1716
- Tight fiscal and monetary policies constrain SL’s growth 1731
- Shell admits dealing with money launderer 1732
- Toshiba may sell chip business to Foxconn for $27bn 1720
- Asian shares pressured by geopolitical risks; Nikkei down 0.25% 1722
- SLIM launches Certificate in Digital Marketing 1727
- Microsoft Hosts Second ‘Device Day’ in Sri Lanka 1723
- Emirates named Best Airline in the World 1722
- Turkish Airlines and social media assist Somalia 1723
- Brain cell therapy ‘promising’ for Parkinson’s disease 1725
- Trump pushed into bombing Syria 1769
- Thailand discovers Power of Women Travellers 1733
- Economics of gambling 1595
- Trans National Aural Identity 3294
- Queen Anula The Shadow of Cleopatra 3318
- Poetry and its possibilities Part 2 3341
- The Enigma of Labyrinths 3445
- From Couture to Kutir 3315
- Hybrid Sources 4719
- With a festive bang! 946
- Easter Fun 942
- Arrogance and crowing is the way of the doomed 963
- Avurudu on the streets 978
- Tick control 945
- Sunny Sunday on the beach 957
- It’s time to save the world 1024
- From viewer to YouTuber! 1017
- Expert skincare and makeup 1033
- Avurudu at Induruwa 1000
- Exo 1022
- Remembering our fallen heroes 2104