The offer/selling price of the benchmark ‘spot’ weakened today, after making eight consecutive market day gains previously, due to the reentry of the Central Bank of Sri Lanka (CBSL) to the foreign exchange market to buy U.S. dollars to strengthen the country’s parlous foreign reserves, sources who didn’t want to be named told ‘BMD.’
Consequently, the selling price of the ‘spot’ weakened by 0.01 per cent ( 20 cents) to Rs 313.50 to the US dollar today, though its ‘buy’ quote remained unchanged at Rs 313, leading to the ‘spot’ to trade at Rs 313.00/313.50 to the dollar in two way quotes, they said.
Nonetheless, year on year (YoY) to today, the ‘spot’ has gained by between Rs 72-81.50 (18.70-20.63 per cent) in two way quotes, thereby defraying cost-push inflationary pressure, data showed. Meanwhile, a year ago the ‘spot’ was trading unchanged for the third consecutive market day to 12 May 2022 at Rs 385/395 to the dollar in two way quotes, statistics showed.
However, CBSL strengthened the official ‘spot’ for the eighth consecutive market day to today, this time too, sharply by 0.97 per cent (Rs 3.06) to Rs 313.65 to the dollar. In other developments, a year ago, CBSL artificially strengthened the administered ‘spot’ by 1.30 per cent (Rs 4.76) to Rs 360.00 to the dollar, nonetheless resulting in a steep YoY strengthening of the official ‘spot’ by 12.90 per cent (Rs 46.35) to the dollar by today.
‘Spot’ trades are settled after two market days from the date of trading. CBSL the steward of Government of Sri Lanka (GoSL) debt and of its foreign reserves deals in the official ‘spot.’ The official ‘spot’ is usually artificially propped up to minimize the cost of GoSL’s foreign debt in rupee terms and also to minimize GoSL’s foreign debt servicing costs in rupee terms.