Spot-next dollar trading resumes in Sri Lanka forex market

ECONOMYNEXT – Sri Lanka’s rupee traded in the spot plus one day market Monday and was quoted around 147.70/148.10 to the US dollar, in late morning trade apparently ending a prohibition by the monetary authority, market participants said.

Sri Lanka’s forex markets have been under heavy moral suasion to restrict spot, spot next and also one week forwards in the past few weeks.

The International Monetary Fund has called for a more flexible exchange rate. However after Britain exited the EU, global markets have been volatile.

There is no spot market for rupee/dollar market yet.

In money markets there was a 29 billion rupee cash shortage which has been filled by an overnight auction. Large liquidity shortage come from interventions in the forex market by the monetary authority.

However unlike in 2015, there has been no permanent accommodation of the shortage by an outright purchase of Treasury bills by the central bank. (Colombo/June27/2016)

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