An Echelon Media Company
Tuesday June 18th, 2024

Sri Lanka rupee at 195.30/195.70 in one-weeks amid intervention

ECONOMYNEXT – Sri Lanka’s rupee was quoted around 195.20/195.70 in the one-week forward market in late trade on Friday after intervention at different levels amid continued excess liquidity and import controls, dealers said while stocks soared.

There were intra-day interventions seen around 193.50 to 194.00 levels in spot, market participants said.

There is rarely any trading in spot except in interventions. Some liquidity develops in spot-next to one weeks’ from time to time.

With record volumes of money printed under Modern Monetary Theory, dollar yields have exceeded rupee yields, inverting forward premiums.

Exporters have stopped selling forward, depriving dollar liquidity to the market.

Some banks have been borrowing at high rates in the market, triggering a forex auction in at least one instance, market participants said.

The central bank had already ordered banks not to buy Sri Lanka sovereign bonds, which are being sold at high yields.

However in times of stress, Sri Lanka forces state-run Ceylon Petroleum Corporation to borrow dollars, while keeping rupee deposits, worsening pressure on the currency and making the rupee run large losses, analysts have said.

The sovereign downgrade to ‘CCC’ has also made it more expensive to confirm import letters of credit with a foreign bank with many overseas banks running out of limits for Sri Lanka, bankers said.

Demand for LCs to be confirmed by third banks from shippers abroad have also gone up, they say.

In the past the fee to confirm an LC was around 0.3 to 0.75 percent. But it has since gone up to 1.5 to 2.5 percent, bankers say.

In bond markets gilt yields were steady, dealers said.

A 2-year bond maturing on 15.12.2022 closed at 5.35/42 per cent on Friday, up from 5.30/35 per cent at Wednesday’s end.

A bond maturing on 15.01.2023 closed at 5.40/45 per cent on Friday, up from 5.35/38 per cent at the last closing.

A bond maturing on 15.09.2024 closed at 6.22/28 per cent, up from 6.17/20 per cent.

A bond maturing on 01.05.2025 closed at 6.32/42 per cent on Friday, down from 6.30/40 per cent at Wednesday’s end.

A bond maturing on 01.02.2026 closed at 6.53/60 per cent on Friday, up from 6.50/57 per cent at the last closing.

A bond maturing on 15.08.2027 closed at 7.05/13 per cent, up from 7.05/10 per cent at the last closing.

A bond maturing on 01.07.2028 closed flat at 7.20/40 per cent.

A 10-year bond maturing on 15.05.2030 closed at 7.60/75 per cent on Friday, up from 7.50/70 per cent.

Meanwhile stocks surged 1.9 percent, with turnover rising to 12 billion rupees. (Colombo/Jan15/2021)

Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Sri Lanka’s Ceylon Chamber links up with Gujarat Chamber

ECONOMYNEXT – The Ceylon Chamber of Commerce has signed an agreement with the Southern Gujarat Chamber of Commerce and Industry (SGCCI) to increase trade cooperation between India and Sri Lanka.

The MOU was signed by CCC CEO Buwanekabahu Perera, SGCCI President Ramesh Vaghasia, in the presence of Dr Valsan Vethody, Consul General for Sri Lanka in Mumbai, India.

“With the signing of the MoU, … the Ceylon Chamber of Commerce and SGCCI aim to facilitate trade between the two countries via initiatives such as trade fairs and delegations, business networking events, training programmes,” the Ceylon Chamber said in a statement.

“This partnership will open doors for Sri Lankan businesses to explore opportunities in Surat’s dynamic market and enable the sharing of expertise and resources between the two regions.”

Established in 1940, SGCCI engages with over 12,000 members and indirect ties with more than 2,00,000 members via 150 associations. It promotes trade, commerce, and industry in South Gujarat.

The region’s commercial and economic centre Surat has risen to prominence as the global epicenter for diamond cutting and as India’s textile hub, and is ranked the world’s 4th fastest growing city with a GDP growth rate of 11.5%

Surat’s economic landscape is vibrant and diverse. As India’s 8th largest and Gujarat’s 2nd largest city, it boasts the highest average annual household income in the country.

The nearby Hazira Industrial Area hosts major corporations like Reliance, ESSAR, SHELL, and L&T. (Colombo/Jun18/2024)

Continue Reading

Sri Lanka telecommunications bill some clauses ruled unconstitutional by SC: Speaker

ECONOMYNEXT – Sri Lanka’s Supreme Court has found a number of clauses in a proposed amendment to the Telecom Telecommunications Amendment bill unconstitutional, speaker Mahinda Yapa Abeywardana said.

“Clause No 8, proposed section 9A 2 of the bill is inconsistent with Article 12 1 of the constitution, however this inconsistency shall cease if word ‘may’ will be replaced with word ‘shall’ as set out in the determination of the supreme court.”

“Clause No 9 is inconsistent with Article 12 1 of the constitution and only can be passed with special majority required under paragraph 2 of the Article 84. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.

Clause No 12, proposed section 17 10 of the bill is inconsistent with Article 12 1 of the constitution and can only be passed with special parliament majority required under Article 84 paragraph 2. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.”

Sections of clauses 13, 18, 20, 33 and 35 were also in violation of the constitution, and could only be passed by a special majority of parliament. (Colombo/Jun18/2024)

Continue Reading

Sri Lanka to exempt one house from imputed rent wealth tax: President

ECONOMYNEXT – Sri Lanka will exempt one house from a proposed wealth tax outlined in an International Monetary Fund program, President Ranil Wickremesinghe said.

About 90 percent of the people’s houses are likely to be exempt from the proposed tax, he said.

“[O]ne house will be exempt from this,” President Wickremesinghe told parliament Monday.

“It is going to have a very high threshold and I do not think the vast majority of the people in this country should even be worried about their house

“Don’t worry your house will be safe.”

The IMF program document however did not mention an exempt on one house, but did mention a threshold.

Taxing houses and thrift in general could have detrimental effects on people’s well-being housing stock and their willingness to remain in the country without migrating, critics say.

Related Sri Lanka to tax imaginary rents on houses under IMF deal

The mechanism of imputed rents was used because rates on houses was assigned to provincial councils and courts could strike it down.

Opposition legislator Harsha de Silva said the Samagi Jana Balwegaya welcomed President Wickremesinghe’s statement. (Colombo/June18/2024)

Continue Reading