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Wednesday February 1st, 2023

Sri Lanka SOE, govt credit surge in Jan 2021, private down

ECONOMYNEXT – Sri Lanka’s credit to government and state enterprises surged in January 2021 but private credit fell, official data showed in a month that the rupee fell sharply after interventions kept the peg stronger in the last week of December.

The central bank printed 55.4 billion rupees in January 2021, after printing 69.4 billion rupees in December 2020.

Total credit to the government from the banking system was 209.9 billion rupees in January 2021 up from 187.7 billion rupees in December.

Credit to state enterprises rose by 55.9 billion rupees, reversing from a contraction of 8.3 billion rupees a month earlier.

SOEs dollar borrowings rose sharply to 446.9 billion rupees in January 2021 from 417.9 billion rupees a month earlier, while borrowings from domestic banking units (rupees) rose to 611.2 billion rupees from 584.3 billion rupees a month earlier.

The official month-end spot US dollar rate published by the central bank fell to 194.39 million dollars in January 2021 from 186.40 to the US dollar in December.

When the rupee had come under pressure from money printing in the past, a favourite tactic of the authorities had been to force the Ceylon Petroleum Corporation to borrow dollars from state banks and run an unhedged dollar position.

The borrowings are then used to settle oil bills, and the loan triggers a big loss as the rupee falls and adds to public sector debt.


Nick Leeson style losses at Sri Lanka’s CPC raise big questions

In 2018 such actions made the CPC run an 80 billion rupee forex loss despite having a price formula to collect rupees and crowd out private consumption.

In January reserve appropriations were also made to repay foreign debt. (Colombo/Mar01/2021)

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Sri Lanka coconut prices ease at auction

ECONOMYNEXT- Sri Lanka’s coconut auction prices fell in the last auction in January 2023, with average prices going down by 4.1 percent at an auction on January 26, data showed.

The average price for 1,000 nuts fell to 80.811.89 from 84,116.85 a week earlier at the weekly auction conducted by Sri Lanka’s Coconut Development Authority.

The highest price was 87,300 rupees for 1,000 nuts down from the previous week’s 90,200 rupees, while the lowest was 72,500 down from 73,000 rupees.

The auction offered 469,564 coconuts and 300,983 nuts were sold. (Colombo/ Feb 01/2023)

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Sri Lanka shares edge up at close

ECONOMYNEXT- Sri Lanka’s shares edged up on Wednesday pushed as investors bought in to beaten down shares following the previous session’s drop, market analyst said.“

At this price level what we are seeing is a lot of confidence from the investors to collect when the prices drop. So, the market is not falling sharply,” a market analyst said.

Market had also seen buying in Expolanka shares on speculation that the parent company of SG Holdings was buying back into the shares.

All Share Price Index (ASPI) edged up by 0.96 percent or 84.96 points to 8,950.01.

The most liquid index S&P SL20 gained 1.27 percent or 35.02 points to 2,799.53.

Banking and Insurance counters had seen interest on the back of positive sentiments from the IMF.

The central bank has said it could cut interest rates in future when the the country sees fall in inflation, which has already started decelerating.

The market saw a turnover of 1.5 billion rupees today,lower than the month’s daily average of 1.8 billion rupees and nearly half of 2022 average turnover of 2.9 billion rupees.

The bourse saw a flow of net foreign inflow of 45 million rupees extending the net offshore buying to 1.9 billion so far this year.

Top gainers of the day were Commercial Bank, Expolanka, and Ceylinco Insurance. (Colombo/Feb01/2023)






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Sri Lanka bond yields down at close

ECONOMYNEXT – Sri Lanka’s bond yields were down at close following a bond auction on Wednesday, dealers said while a guidance peg for interbank transactions remained unchanged.

“The rates were steady at the auction,” a dealer said.

“This can be a signal to the market saying the rates will go down in the future.”

A bond maturing on 01.07.2025 closed at 32.40/60 percent, down from yesterday’s 32.60/85 percent.

A bond maturing on 01.05.2027 closed at 29.10/35 marginally down from yesterday’s 29.20/75 percent.

The Central Bank’s guidance peg for interbank US dollar transactions remained unchanged at 362.14 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 371.38 rupees on Friday, data showed. (Colombo/Feb 01/2022)

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