NFIs In GSM Pass Rs 80B

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By 2017-09-23

By Paneetha Ameresekere

Net Foreign Investments (NFIs) in the Government Securities Market (GSM) passed the Rs 80 billion mark in the seven months to Wednesday (20), when foreign investors, on a net basis, purchased Rs 7.86 billion worth of Treasury (T)- Bills and T-Bonds in the week ended Wednesday, data showed.

As such, net foreign inflows (NFIs)...... in the review period have increased by Rs 81.74 billion (41.68%) to Rs 277.86 billion since 22 February.
NFIs to the GSM take depreciative pressure off the rupee due to the adequate availability of US dollars in the market. Such an abundance of supply usually goes to the strengthening of the rupee.

On the other hand such NFIs also increase the Government's debt. Issuing of T-Bills and T-Bonds is a popular way the Government raises money to meet its various needs. Nonetheless, the availability of dollars in the market also precludes the necessity of the Central Bank of Sri Lanka (CBSL) to increase rates at its Tuesday's (26) release of its monetary policy statement. The Central Bank generally increases rates to make rupee borrowings more expensive, borrowed for the purpose of buying dollars to make imports. Foreign import demand in the absence of an adequate supply of dollars cause depreciative pressure on the rupee while at the same time endangering the building up of the country's foreign reserves.

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