ECONOMYNEXT - Foreign investors had sold down about 2.8 billion rupees of bonds in the week to June 2018, amid political uncertainty, in a trend that began about four weeks ago, official data showed.
Foreign investor holdings grew up to April 25 and sales began as the rupee came under pressure and some political uncertainty with President Maithripala Sirisena attacking the main partner in the coalition.
In the week to May 02, foreign bond holdings fell by 5.0 billion rupees from a peak of 323 billion rupees to 318 billion rupees.
By May 23 it was down to 308 billion rupees but it eased on May 30 to 307.28 billion rupees. This week the stock was down to 304.45 billion rupees.
Sri Lanka's central improved monetary policy in the past two weeks, though it cut rates and injected cash in the first weeks of April.
In 2015 the credibility of the peg was lost with a rate cut which led to foreign investor sales, but liquidity injections began long before as credit picked up in the last quarter of 2014.
In the absence of printed money banks that buy bonds from exiting investors cannot also give credit. (Colombo/June08/2018)