By Paneetha Ameresekere
Ceylon FT: Financial markets were impacted with the week's disturbances experienced in certain parts of the Southern Province and in the fringe areas of the Western Province, with some of the commercial establishments of those who feel threatened continuing to be closed, with the benchmark ASPI in the stock market having had fallen by 0.49% (31.21 points) to 6,313.20 points in the last two days up to yesterday, market sources told this newspaper.
"The recent incidents in the island are all over the global media, with the message given not to visit Sri Lanka," they said. Local investors are also jittery, the sources said. To make matters worse, no one 'really' responsible for the incidents has been arrested, while their hate speeches are given wide coverage in international media, they said.
"Foreign buying has not been affected as yet; we hope things will be brought under control for the good of the bourse," a stockbroker told Ceylon FT. Meanwhile the bourse returned aRs 683.6 million turnover yesterday, following the Rs 713.9 million made on Wednesday, with the S&P SL 20 Index having had fallen by 0.8% (30.40 points) to 3,490.67 points in the last two days of trading up to yesterday.
Foreign buying in Com Bank resulted in the bourse enjoying a net foreign inflow (NFI) of Rs 105.9 million, taking NFIs in the year-to-date to Rs 5.9 billion. There were 67 gainers and 107 losers yesterday.
In the foreign exchange (FX) market, the exchange rate (ER) in interbank spot trading of the US dollar, held at Rs 130.25 on thin trading yesterday, sources said. The recent disturbances have impacted the FX market because of certain commercial establishments remaining closed, the sources said.
Secondary market trading in government securities was also thin, they said.
Settlement date for all of these three auctions is also today. However, the market took up only Rs 22,350 million of these maturing repos, with no takers for the balance Rs 23,685 million maturing repos. This amount will help to soften upward pressure on rates when it floods the money market today.
CBSL's practice also has been to additionally flood the market with more excess liquidity on Fridays by the purchase of T Bills as well. Further, foreign debt servicing, similar to what took place on Wednesday, also usually takes place on Fridays as well.
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Ceylon FT: Financial markets were impacted with the week's disturbances experienced in certain parts of the Southern Province and in the fringe areas of the Western Province, with some of the commercial establishments of those who feel threatened continuing to be closed, with the benchmark ASPI in the stock market having had fallen by 0.49% (31.21 points) to 6,313.20 points in the last two days up to yesterday, market sources told this newspaper.
"The recent incidents in the island are all over the global media, with the message given not to visit Sri Lanka," they said. Local investors are also jittery, the sources said. To make matters worse, no one 'really' responsible for the incidents has been arrested, while their hate speeches are given wide coverage in international media, they said.
"Foreign buying has not been affected as yet; we hope things will be brought under control for the good of the bourse," a stockbroker told Ceylon FT. Meanwhile the bourse returned aRs 683.6 million turnover yesterday, following the Rs 713.9 million made on Wednesday, with the S&P SL 20 Index having had fallen by 0.8% (30.40 points) to 3,490.67 points in the last two days of trading up to yesterday.
Foreign buying in Com Bank resulted in the bourse enjoying a net foreign inflow (NFI) of Rs 105.9 million, taking NFIs in the year-to-date to Rs 5.9 billion. There were 67 gainers and 107 losers yesterday.
In the foreign exchange (FX) market, the exchange rate (ER) in interbank spot trading of the US dollar, held at Rs 130.25 on thin trading yesterday, sources said. The recent disturbances have impacted the FX market because of certain commercial establishments remaining closed, the sources said.
Secondary market trading in government securities was also thin, they said.
With excess liquidity being tight due to Central Bank of Sri Lanka retiring maturing Treasury (T) Bills, the weighted average rates of call money and market repo transactions in the past two days up to yesterday have had increased by two and four basis points (bps) each to 6.99% and 6.57% respectively as at yesterday.
On Wednesday, CBSL retired 86.4% (Rs 8,549.71 million) worth of its maturing T Bill holdings, thereby bringing down its gross T Bill holdings to Rs 1,343.66 million, equivalent to its book value T Bill holdings.
On Wednesday, CBSL retired 86.4% (Rs 8,549.71 million) worth of its maturing T Bill holdings, thereby bringing down its gross T Bill holdings to Rs 1,343.66 million, equivalent to its book value T Bill holdings.
As a result, market's excess liquidity went down by 81.4% (Rs 12,119 million) to Rs 2,776 million in the review period. The reason why market's excess liquidity went down by a much faster rate (Rs 3,569.29 million) was because that amount of excess liquidity was taken out from the money market to buy the necessary dollars from CBSL's external reserves to pay for external debt servicing commitments.
The FX market is circumvented in such an operation due to fears that if the required dollars are drawn out from the FX market, that would cause downward pressure on the rupee. Sri Lanka is an import dependent economy. Therefore a weak rupee would make consumer prices to go up.
Meanwhile, on Thursday (yesterday) CBSL's T Bill stock virtually maintained Wednesday's status quo, recording a figure of Rs 1,343.96 million, while market's excess liquidity crept up (Rs 1,406 million) to Rs 4,182 million probably due to CBSL buying inflows from the FX market and releasing the equivalent rupees to the money market.
CBSL also held three term repo auctions for Rs 50,000 million yesterday, ostensibly to take up four maturing repo auctions (one term and three short-term) for Rs 46,035 million due today.
The FX market is circumvented in such an operation due to fears that if the required dollars are drawn out from the FX market, that would cause downward pressure on the rupee. Sri Lanka is an import dependent economy. Therefore a weak rupee would make consumer prices to go up.
Meanwhile, on Thursday (yesterday) CBSL's T Bill stock virtually maintained Wednesday's status quo, recording a figure of Rs 1,343.96 million, while market's excess liquidity crept up (Rs 1,406 million) to Rs 4,182 million probably due to CBSL buying inflows from the FX market and releasing the equivalent rupees to the money market.
CBSL also held three term repo auctions for Rs 50,000 million yesterday, ostensibly to take up four maturing repo auctions (one term and three short-term) for Rs 46,035 million due today.
Settlement date for all of these three auctions is also today. However, the market took up only Rs 22,350 million of these maturing repos, with no takers for the balance Rs 23,685 million maturing repos. This amount will help to soften upward pressure on rates when it floods the money market today.
CBSL's practice also has been to additionally flood the market with more excess liquidity on Fridays by the purchase of T Bills as well. Further, foreign debt servicing, similar to what took place on Wednesday, also usually takes place on Fridays as well.
www.ceylontoday.lk
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