Sri Lanka rupee steady in forex markets; bonds quiet

ECONOMYNEXT – The Sri Lanka rupee was quoted around 141.20/30 to the US dollar in the spot forex market after opening wider at 141.10/30 dealers said, while money markets remained liquid ahead of a Treasuries auction.

The rupee closed at 141.25/30 to the US dollar Tuesday.

Sri Lanka’s Central Bank Governor Arjuna Mahendran said the rupee appeared fairly valued after a sharp from September 04 and the market was allowed to determine the overall direction.

Deputy Governor Nandalal Weerasinghe said the falling rupee was intended to take some edge off the demand fired by state wage hikes.

A falling rupee changes inflates prices of imported and exported goods, slashing incomes of all people including those in the private sector and their savings, while giving more nominal revenues to the state from value based taxes.

Sri Lanka has printed money around 170 billion rupees since June to keep interest rates down and sterilize foreign exchange sales amid strong state and private credit growth and capital flight.

Money markets remained liquid with excess liquidity rising to 70.7 billion rupees from 57.6 billion rupees, which is usually indicative of a foreign inflow.

Clean money was traded around 6.35 percent and gilt-backed repos at 6.40/50 percent levels.

In bond markets 2-year bonds maturing on 01.06.2018 was quoted at 9.15/25 percent, 5-year bonds maturing on 01.05.2020 – 9.70/80 percent, 6-year bonds maturing on 01.08.2021is 9.95/10.05 and 8-year bonds maturing on 01.09.2023 10.10/20 percent.

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