Rupee bonds held by foreigners in Sri Lanka slightly up

ECONOMYNEXT – Rupee denominated Sri Lanka bond held by foreign investors grew slightly to 143.8 billion rupees to 143.95 billion rupees in the week to June 19, central bank data showed.

Foreign investors have been net sellers in rupee bonds in 2019 with holdings falling from 157 billion rupees in on January 02, particularly after a interest rates fell giving a chance to take profits, but they have been net buyers on some weeks.

In 2018, as the central bank printed money to enforce a rate cut, just as the economy recovered generating monetary instability, foreign investors fled.

Over 2018 foreign investor holdings is rupee bonds fell from 321.9 billion rupees to 157.8 billion rupees.

There have been calls to reform Sri Lanka’s non-credible soft-peg so that monetary instability is minimized.

The peg which is an external anchor breaks primarily due to the operation of dual anchors, where money is printed as soon as inflation falls effectively targeting a domestic anchor. (Colombo/June24/2019)

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