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Foreign investor holdings in Sri Lanka bonds slightly up

ECONOMYNEXT – Foreign investor holdings of Sri Lanka rupee bonds grew by about 1.5 billion rupees to 105.52 billion rupees on January 2020, up from 104.02 billion rupees a week earlier, official data show.

Foreign investors have exited steadily since a rate cut in April 2018, and liquidity injections in August, coupled with a so-called one sided ‘DMC’ rule under an International Monetary Fund program.

The one side DMC which tends to undermined the credibility of Sri Lanka’s dollar peg swiftly, leading to not only unease among foreign investors in rupee bonds, but also early covering of bills by the importers and exporter hold-back, analysts have warned.

The rupee has been relatively stable amid weak credit in 2019, but liquidity injections resumed after July as policy was reversed.

At one time foreign investors held more than 450 billion rupees of Sri Lanka bonds. (Colombo/Jan13/2020)

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