Central Bank of Sri Lanka’s (CBSL’s) US dollar buying ‘pause’ from the market for the fourth consecutive market day to today, resulted in the benchmark ‘spot,’ this time strengthening by between 0.16-0.11 per cent(0.50-0.35 rupees) in two way quotes to be trading at Rs 319.00/319.405 to the US dollar, market sources who didn’t want to be named told ‘BMD.’ Previous days CBSL’s exercise of buying dollars from the market was to strengthen the country’s foreign reserves, but in the process, that weakened the ‘spot.’
Consequently the ‘spot’ has sharply gained by between 13.78 per cent to 15.95 per cent (51-60.60 rupees) to Rs 319.00/319.40 to the dollar in two way quotes, year on year (YoY) to today, thereby defraying cost-push inflationary pressure, data showed.
Meanwhile, a year ago the ‘spot’ sharply weakened for the fourth consecutive market day, this time by between 2.78-2.70 per cent ( 10 rupees each in two way quotes) over its previous day’s close to be trading at Rs 370/380 to the dollar in two way quotes, statistics showed.
In related developments, CBSL strengthened the official ‘spot’ for the third consecutive market day to today, this time by 0.09 per cent (0.30 rupees) to Rs 319.97 to the dollar. In other developments, a year ago, CBSL, then under the purview of Basil Rajapaksa who was the Finance Minister at that time, artificially strengthened the administered ‘spot’ by 0.54 per cent (Rs 1.85) to Rs 340.00 to the dollar, nonetheless, resulting in a steep YoY strengthening of the official ‘spot’ by 5.89 per cent (Rs 20.03) 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.
