By Paneetha Ameresekere
Ceylon Finance Today: In the midst of heavy government expenditure requirements, Central Bank of Sri Lanka (CBSL) lent another Rs 33.4 billion to the Government of Sri Lanka (GoSL) at yesterday's trading, thereby providing fodder to fuel demand side inflationary pressure on the economy which hits the poor and the fixed wage earner the hardest.
As a result, CBSL's Treasury (T) Bill holdings went up by 60.7% to Rs 70.1 billion. Lending T Bills is the key way GoSL borrows from CBSL at no interest cost.
However, in addition to GoSL's borrowings from CBSL it also borrowed another Rs 25.3 billion from the market via five auctions for the 'outright sale of T Bills.' These sales were executed at weighted average yields of a minimum of 6.5% and of a maximum of 6.78%. CBSL's current standing deposit facility is 6.5%.
In related developments, market's excess liquidity went down by a massive Rs 41.8 billion at yesterday's trading. If this was due to a mix of GoSL's foreign debt servicing commitments and CBSL's defence of the rupee (CBSL is currently preventing depreciating pressure on the rupee by administratively controlling the spot rate at Rs 132.90 to the US dollar), then this would be tantamount to Sri Lanka's foreign reserves being depleted by a massive amount equivalent to US$ 311 million.GoSL's foreign debt servicing commitments in the three months to April 2015 is envisaged at a massive US$ 1.7 billion.
Another way, where excess liquidity may be depleted under the present situation is if banks choose to keep their excess liquidity in their own vaults due to 'limits' issues or due to Treasury management.
As a result, the weighted average rate (WAR) of overnight market repo transactions went up by a massive 39 basis points (bps) to 6.61%, while the increase in the WAR of call money was more subdued at one bp to 6.70% at yesterday's trading.
Market's excess liquidity as at the end of the day was Rs 88.3 billion.
www.ceylontoday.lk
Ceylon Finance Today: In the midst of heavy government expenditure requirements, Central Bank of Sri Lanka (CBSL) lent another Rs 33.4 billion to the Government of Sri Lanka (GoSL) at yesterday's trading, thereby providing fodder to fuel demand side inflationary pressure on the economy which hits the poor and the fixed wage earner the hardest.
As a result, CBSL's Treasury (T) Bill holdings went up by 60.7% to Rs 70.1 billion. Lending T Bills is the key way GoSL borrows from CBSL at no interest cost.
However, in addition to GoSL's borrowings from CBSL it also borrowed another Rs 25.3 billion from the market via five auctions for the 'outright sale of T Bills.' These sales were executed at weighted average yields of a minimum of 6.5% and of a maximum of 6.78%. CBSL's current standing deposit facility is 6.5%.
In related developments, market's excess liquidity went down by a massive Rs 41.8 billion at yesterday's trading. If this was due to a mix of GoSL's foreign debt servicing commitments and CBSL's defence of the rupee (CBSL is currently preventing depreciating pressure on the rupee by administratively controlling the spot rate at Rs 132.90 to the US dollar), then this would be tantamount to Sri Lanka's foreign reserves being depleted by a massive amount equivalent to US$ 311 million.GoSL's foreign debt servicing commitments in the three months to April 2015 is envisaged at a massive US$ 1.7 billion.
Another way, where excess liquidity may be depleted under the present situation is if banks choose to keep their excess liquidity in their own vaults due to 'limits' issues or due to Treasury management.
As a result, the weighted average rate (WAR) of overnight market repo transactions went up by a massive 39 basis points (bps) to 6.61%, while the increase in the WAR of call money was more subdued at one bp to 6.70% at yesterday's trading.
Market's excess liquidity as at the end of the day was Rs 88.3 billion.
www.ceylontoday.lk
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