By Paneetha Ameresekere
Ceylon Finance Today: The market is looking for direction till 23 April, 2015, the day Premier Ranil Wickremesinghe's UNP Government has said that Parliament will be dissolved, market sources told Ceylon FT yesterday.
As a result, activity in the foreign exchange (FX) market remained virtually unchanged, now touching one month, where such conditions have been prevailing, with trading, if conducted, being executed on thin volumes on seven day forwards, at Rs 133.60 to the US dollar in interbank trading under a controlled regime, they said. However, most trades were translated to two weeks forwards, with trades being executed at the Rs 133.80-134 levels, sources said.
The market has already waited for one month, now it will have to wait a further month, sources said.
It has no direction, they however said.
The 'spot' is being controlled under Central Bank of Sri Lanka's (CBSL's) moral suasion umbrella to prevent depreciating pressure at Rs 132.90.
The rupee is not allowed to depreciate for fear that such depreciating pressure would cause import prices to up, in the context that Sri Lanka is an import dependent economy.
The incumbent government fears that such a scenario would make them unpopular, in the context that a general election is expected to be held soon, though the present Parliament has a mandate to go on up to next year.
But this has caused Sri Lanka's FX reserves to deplete by CBSL selling US dollars at a discounted price of Rs 132.90 to the market to prevent further depreciating pressure on the local currency.
However, preventing the rupee to depreciate has to be looked at in the context, that all major currencies in the world such as the euro, the sterling pound a
Such depreciations have been caused due to the recovery of the US economy, thereby making dollar assets more attractive to an investor. Hence, the appreciation of the dollar due to demand.
To make matters worse, CBSL is currently rocked by a Treasury (T) bond scandal involving names in high places and figuring appointees of the incumbent UNP regime.
As a result, secondary market trading in T bonds and T bills was also thin, sources said.
Meanwhile, 23 April is significant to the UNP in more ways than one. It was on 23 April 1993 that former UNP strongman Lalith Athulathmudali, who had turned renegade by then, due to his differences with former UNP President Ranasinghe Premadasa, was assassinated by an LTTE gunman, while addressing an election rally in Colombo.
It's on such a day that the Wickremesinghe Government is seeking a dissolution of Parliament and are calling for fresh polls, on the grounds that the UNP, which is now a minority in Parliament, may get the required majority that it seeks in the event general elections are held now.
www.ceylontoday.lk
Ceylon Finance Today: The market is looking for direction till 23 April, 2015, the day Premier Ranil Wickremesinghe's UNP Government has said that Parliament will be dissolved, market sources told Ceylon FT yesterday.
As a result, activity in the foreign exchange (FX) market remained virtually unchanged, now touching one month, where such conditions have been prevailing, with trading, if conducted, being executed on thin volumes on seven day forwards, at Rs 133.60 to the US dollar in interbank trading under a controlled regime, they said. However, most trades were translated to two weeks forwards, with trades being executed at the Rs 133.80-134 levels, sources said.
The market has already waited for one month, now it will have to wait a further month, sources said.
It has no direction, they however said.
The 'spot' is being controlled under Central Bank of Sri Lanka's (CBSL's) moral suasion umbrella to prevent depreciating pressure at Rs 132.90.
The rupee is not allowed to depreciate for fear that such depreciating pressure would cause import prices to up, in the context that Sri Lanka is an import dependent economy.
The incumbent government fears that such a scenario would make them unpopular, in the context that a general election is expected to be held soon, though the present Parliament has a mandate to go on up to next year.
But this has caused Sri Lanka's FX reserves to deplete by CBSL selling US dollars at a discounted price of Rs 132.90 to the market to prevent further depreciating pressure on the local currency.
However, preventing the rupee to depreciate has to be looked at in the context, that all major currencies in the world such as the euro, the sterling pound a
Such depreciations have been caused due to the recovery of the US economy, thereby making dollar assets more attractive to an investor. Hence, the appreciation of the dollar due to demand.
To make matters worse, CBSL is currently rocked by a Treasury (T) bond scandal involving names in high places and figuring appointees of the incumbent UNP regime.
As a result, secondary market trading in T bonds and T bills was also thin, sources said.
Meanwhile, 23 April is significant to the UNP in more ways than one. It was on 23 April 1993 that former UNP strongman Lalith Athulathmudali, who had turned renegade by then, due to his differences with former UNP President Ranasinghe Premadasa, was assassinated by an LTTE gunman, while addressing an election rally in Colombo.
It's on such a day that the Wickremesinghe Government is seeking a dissolution of Parliament and are calling for fresh polls, on the grounds that the UNP, which is now a minority in Parliament, may get the required majority that it seeks in the event general elections are held now.
www.ceylontoday.lk
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