The benchmark ‘spot’ made one of its sharpest gains in absolute terms in recent times, when it gained by between Rs three-2.90 (0.95-0.92 per cent) to be trading at Rs 313.00/313.30 to the US dollar in two way quotes today, market sources who didn’t want to be named told ‘BMD.’
These gains are on the back of Central Bank of Sri Lanka (CBSL) correspondingly keeping up its dollar buying ‘pause’ from the market for the eighth consecutive market day to today, consequently aiding the ‘spot’ to make gains for an equivalent number of days. Prior dollar buying from the market by the CBSL was to strengthen Sri Lanka’s parlous foreign reserves.
In the eight market days to today, the ‘spot’ has steeply gained by Rs 8.60 (2.67 per cent) in two way quotes and year on year (YoY) it has gained by between Rs 72-81.70 (18.70-20.68 per cent), thereby defraying cost-push inflationary pressure, data showed. Meanwhile, a year ago the ‘spot’ was trading unchanged for the second consecutive market day to 11 May 2022 at Rs 385/395 to the dollar in two way quotes, statistics showed.
In related developments, CBSL strengthened the official ‘spot’ for the seventh consecutive market day to today, this time sharply by 0.43 per cent (1.38 rupees) to Rs 316.71 to the dollar. In other developments, a year ago, CBSL kept the administered ‘spot’ unchanged for the second consecutive market day to 11 May 2022 at Rs 364.76 to the dollar, nonetheless resulting in a steep YoY strengthening of the official ‘spot’ by 13.17 per cent (Rs 48.05) to the dollar, to 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.