An Echelon Media Company
Tuesday April 23rd, 2024

Sri Lanka rupee closes stronger at Rs343/348 to the US dollar

ECONOMYNEXT – Sri Lankas’s rupee closed around 343/348 to the US dollar in the spot market Thursday amid heavy bank selling and hardly any importer demand, dealers said, up from 353.46/353.50 rupees a day earlier.

Sri Lanka’s rupee gained after the central bank relaxed a surrender rule, releasing more dollars to the market, after earlier hiking rates and phasing out money printing.

Private credit is also negative and taxes have been raised and energy market priced further reducing domestic credit.

Exchange rate pegs come under pressure when the central bank injects liquidity to mis-target rates and banks make loans with the newly created money instead of deposits.

“Most banks are now oversold,” a dealer said, indicating that net open positions are no longer positive in most banks.

“There isn’t an unlimited supply of dollars.”

There was not much exporter selling, dealers said. Exporters also have to sell to commercial banks under a repatriation rule, which was brought after money was printed to mis-target rates triggering forex shortages.

The central bank announced a guidance peg of 353.46 to the US dollar Thursday with a 7.50 rupee variance on either side.

On Thursday business was done around 346.15 US at the stronger end of the trading bank and a little weaker.

The guidance peg was brought in 2022 after attempt at float failed due to the surrender rule where banks were forced to sell 50 percent of their inflows to the central bank.

When the central bank buys, dollars disappear from the interbank market and rupees appear, preventing the currency peg from strengthening, if domestic credit is strong.

Amid almost non-existent importer demand, the central bank is estimated to have bought 80 to 100 million dollars on Thursday, dealers said.

The liquidity shortages originally came from short-term sterilized interventions (fx reserve losses) at time when domestic credit was driven by artificially low rates as reserves were used for imports and the country defaulted on its debt. (Colombo/Mar02/2023)

Comments (2)

Your email address will not be published.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

  1. ASHANTH says:

    243/348? Are you sure

  2. sacre blieu says:

    Puzzling headlines and seems to misdirect the reader?

View all comments (2)

Comments (2)

Cancel reply

Your email address will not be published.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

  1. ASHANTH says:

    243/348? Are you sure

  2. sacre blieu says:

    Puzzling headlines and seems to misdirect the reader?

Iran President to open Sri Lanka $514mn irrigation, hydro power project

MULTIPURPOSE: Uma Oya multipurpose development project is the largest since the end of the Mahaweli projects.

ECONOMYNEXT – Iran President Seyyed Ebrahim Raisi will inaugurate an irrigation and hydropower project that was designed and built by Iranian engineering firm and was also initially financed before international sanctions hit the project.

The Uma Oya (River) project will irrigate 4,500 acres of new agricultural land, generate 290 Gigawatt hours of electricity and also provide drinking water, a government statement said.

Sri Lanka had awarded an engineering, procurement, construction (EPC) to Iran’s FARAB engineering group to design and construct the 514 million dollar multipurpose project in 2010.

The project was funded until 2013 with a million US dollar credit from the Export Development Bank of Iran but international sanctions prevented the country from continuing financing, a government statement said.

The project continued with funding from Sri Lanka. Sri Lanka had since repaid 19.3 million dollars of the credit and 35.2 million remains outstanding.

The Uma Oya project has a 120MW of hydro power generators, which can generate 290 Giga Watt hours of energy.

Each year 145 million cubic metres of water will be taken from Uma Oya to the Kirindi Oya river valley after generating electricity in an underground power station.

It will irrigate 1,500 hectares of existing agricultural and 4,500 hectares of new land in the Moneragala district, where crops can be cultivated in both the Maha and Yala seasons.

About 39 million cubic meters of water will be used for drinking and industrial purposes.

Two reservoirs built at Dyraaba and Puhulpola in Uma Oya basin is connected by a 3.98 kilometre conveyance tunnel and water is taken through a 15.2 kilomtre headrace tunnel to an underground power station. A tailrace tunnel takes water from the power station to the Kirindi Oya basin.

The project was originally expected to be completed in 2015, but due to financing delays and later water leaking into the headrace tunnel and the Covid pandemic had delayed it. The project completion date was extended to March 31, 2024 and defect liability date to March 31, 2025.

(Colombo/April23/2024 – CORRECTED Iran President Seyyed Ebrahim Raisi will inaugurate an irrigation and hydropower project that was designed and built by Iranian engineering firm.)

Continue Reading

Sri Lanka state oligopoly allowed to import some black gram

ECONOMYNEXT – Sri Lanka has allowed the import of some black gram, by three state agencies, according to a gazette notice issued under the hand of President Ranil Wickremesinghe.

Import licenses will be given for 2,000 metric tonnes of the seed classified under HS Code 7312.31.22 and 29.

Sri Lanka State Trading Corporation, National Food Promotion Board and Sri Lanka Hadabima Authority is to be given import licenses.

Traders have resorted to smuggling some types of black gram (ulundu) mis classified as chick peas, to get over high taxes and import restrictions.

Tamil legislators have also protested the import controls, which they go into several key ethnic foods they consume. (Colombo/Apr23/2024)

Continue Reading

Sri Lanka Foreign Ministry consular division shifted to Battaramulla

ECONOMYNEXT – Sri Lanka’s Foreign Ministry said it consular division would be shifted to the Suhurupaya building in Subuthipura, Battaramulla from May 02, 2024.

Document authentication services provided by the Consular Affairs Division in Colombo will be suspended on 29 and 30 April 2024 held transfer the Electronic Document Authentication System (e-DAS) to the new premises at Suhurupaya.

Urgent applications for authentication to the Consular Division in Colombo, or any Regional Consular Offices by 4.15 pm on 26 April 2024, the Foreign Ministry said.

Regional Consular Offices in Jaffna, Trincomalee, Kurunegala, Kandy and Matara will remain open to accept applications.

Authenticated documents will be delivered to the applicants only on Thursday, 02 May 2024.

Continue Reading