‘Rupee’ Up by a Rupee!

The benchmark ‘spot’ sharply strengthened by a rupee (0.31 per cent) in two way quotes to be trading at Rs 318.00/318.40 to the US dollar as Central Bank of Sri Lanka (CBSL) correspondingly kept up its dollar buying ‘pause’ from the market for the fifth consecutive market day to yesterday, market sources who didn’t want to be named told ‘BMD.’

Consequently the ‘spot’ has sharply gained by between 16.32 per cent to 18.36 per cent (62-71.60 rupees) to Rs 319.00/319.40 to the dollar in two way quotes, year on year (YoY) to yesterday, thereby defraying cost-push inflationary pressure, data showed. Meanwhile, a year ago the ‘spot’ remained unchanged at Rs 380/390 to the dollar in two way quotes, statistics showed.

In related developments, CBSL strengthened the official ‘spot’ for the fourth consecutive market day to yesterday, this time by 0.17 per cent (0.53 rupees) to Rs 319.44 to the dollar. In other developments, a year ago, CBSL, then under the purview of current Foreign Minister Ali Sabry, who was the Finance Minister at that time, weakened the administered ‘spot’ for the second consecutive market day to Friday 6 May 2022, this time too, sharply, by 2.48 per cent (Rs 8.67) to Rs 358.57 to the dollar, resulting in a steep YoY strengthening of the official ‘spot’ by 10.91 per cent (Rs 39.13) to the dollar.

‘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.