‘Spot’ goes below Rs 153 Money Printing 0.5% of GDP

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By 2017-09-26

By Paneetha Ameresekere

Central Bank of Sri Lanka (CBSL) continued to reduce its face value money printing (FVMP) holdings for the second consecutive market day yesterday, reducing the same by Rs 10,862.97 million (14.73%) to Rs 62,896.03 million or 0.5% of the GDP as per last year's estimates, yesterday over Friday (22 September), CBSL data showed. As a result, Government of Sri Lanka's (GoSL's) MP borrowing costs fell by Rs 123.83 million (15.52%) to Rs 674.28 million yesterday. Yesterday also saw the settlement of US$ 7.41 million (Rs 1,131.97 million) worth of net foreign inflows (NFIs) led by exporter conversions on Thursday, purchased by CBSL to swell the country's foreign reserves. Conversions are based on the middle rate of the benchmark 'spot' as at Thursday, which sources told this newspaper was Rs 152.80 to the US dollar. Due to these developments, FV net excess liquidity (FVNEL), yesterday over Friday fell by Rs 9,731 million (52.76%) to Rs 8,714 million. Yesterday's book value (BV) MP value was Rs 62,221.75 million, equivalent to 0.5% of GDP as per last year's estimates.

A year ago on Friday, 23 September, 2016, CBSL's BVMP was Rs 160,467.43 million, equivalent to 1.4% of GDP as per last year's estimates, a decline of 0.9% of GDP since. When MP declines by the retirement of maturing Treasury (T)-Bills in CBSL's holdings instead of reissuing those to itself, which causes demand side deflationary pressure.

'Spot' Goes Below Rs 153
In related developments, the 'spot' weakened for the second consecutive market day yesterday led by import demand, sources said. As a result, the 'spot' fell sharply by between 15-20 cents to close at Rs 152.95/153.10 to the dollar in two way quotes on thin volumes.

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