Rupee weakens after liquidity injections; spot market trades halted

21 September 2016 12:00 am - 0     - {{hitsCtrl.values.hits}}

A A A

Economynext: Moral suasion returned to Sri Lanka’s forex markets Tuesday with trading in the spot market halted by authorities with no trades allowed above 145.90 to the US dollar dealers said as the rupee weakened in the wake of heavy liquidity injections.


The rupee weakened to 146.20/25 in spot next-next deals, where settlement is made four days ahead, implying that the indicative spot is 146.10/20 to the US dollar, dealers said. In the spot market settlement is made two days later. 


Sri Lanka central bank bought dollars, but from August 29 allowed excess liquidity to build up, effectively letting the foot of the monetary accelerator to boost credit and stop collecting foreign reserves.
Excess liquidity rose to Rs.20 billion by August 31 as he central bank engaged in unsterilized forex purchases without attempting keep the reserves by sterilizing the rupees. On subsequent days the liquidity disappeared. By September 19, a liquidity shortage rose to Rs.48 billion rupees, up from Rs.31 billion. Liquidity goes short when the Central Bank sells dollars to when excess liquidity turns to imports or foreign loan repayments are made.


Injecting liquidity (printing money) on an overnight basis rather than giving accommodating credit with outright purchases of Treasury bills makes banks search for deposits, which cuts consumption.
Sri Lanka’s Central Bank generates balance of payments by purchasing Treasury bills outright either to finance the budget deficit or to sterilize forex sales.


On Wednesday the Central Bank injected Rs.43 billion at 8.49 percent overnight, down from Rs.50 billion on Tuesday. On Tuesday the Treasury bill stock of the Central Bank rose to Rs.226 billion, up from Rs.207 billion on Monday.

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




What happened at Mahara: Conspiracy OR sudden unrest ?

A violent protest erupted in one of the country’s largest high security pri

No money, paddy or rice

As President Gotabaya Rajapaksa completes his first year in office, the Consu

COVID-19: We can’t prevent new outbreaks

Once again, emphatic declarations are being made that there are zero risks of

Gotabaya Govt’s pre-emptive strike against LTTE Maaveerar Naal

November 27th 1989 was the day on which the Liberation Tigers of Tamil Eelam

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.