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» Elsewhere vs SL : Honesty, Social responsibility , Word twisting and Decency
Yesterday at 7:50 pm by nihal123

» Dividend Announcement
Yesterday at 5:03 pm by Ethical Trader

» සතියක් තුළ දී ඒකක 90 කින් කොටස් වෙළෙඳපොළ පහළට. විදෙස් විකුණුම් තවදුරටත්
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» බියර් සමාගමේ ලාභය 133% කින් වැඩිවෙද්දී අරක්කු සමාගමේ ලාභය 83% කින් වැඩිවෙලා
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» Obituary Notice.
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» රුපියල 161.54ට යයි
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» PABC.N0000 (Pan Asia Banking Corporation PLC)
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» අනං මනං! #/+?.<>
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» ආදායම් බද්දෙන් ආසිරි තැලෙයි
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» Sri Lankan listed firms told to pay dividends directly to shareholder bank accounts
Tue Aug 14, 2018 2:38 am by pjrngroup

» Sri Lanka's Hayleys group to sell assets to reduce debt
Mon Aug 13, 2018 10:05 pm by nihal123

» අපේ දුම්රිය සේවය තැබු ලෝක වර්තාව; වර්ජනයේ අරමුණ රුපියල් 11605 කින් පඩි වැඩිකර ගැනීම!
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» "මාව පෙළඹෙව්වේ සංගක්කාර" - ඉන්දීය ක්‍රිකට් ක්‍රීඩිකා ස්ම්‍රිති මන්දනා
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» Sri Lanka's Ceylon Tobacco net up 47-pct, volumes grow
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» Sri Lanka's Tokyo Cement in the red, vessel sale adds to loss
Fri Aug 10, 2018 2:27 pm by The Invisible

» Sri Lanka’s Watawala Plantations June net down 57-pct
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» Sri Lanka’s Aitken Spence Hotel June quarter losses rise 22-pct
Fri Aug 10, 2018 2:23 pm by The Invisible

» ඩොලරයේ වැඩිම විකුණුම් මිල අද වාර්තා වෙයි
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» PB. N0000 (People's Bank)
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» දේශපාලනික වාසි උදෙසා සිදුවන ප්‍රතිපත්ති වෙනස්වීම් ගැන මහ බැංකුව මෙසේ කියයි
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» Amazing හෙළ වෙදකම
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» විදේශිකයෝ ඩොලර් මිලියන 229 ක බැඳුම්කර ආයෝජන ඉවත් කර ගනිති
Tue Aug 07, 2018 12:22 pm by Ethical Trader

» මූල්‍ය සමාගම් ඒකාබද්ධ කිරීම වක්‍රාකාරයෙන් සිදුවෙනවා – මහ බැංකු නියෝජ්‍ය අධිපති කියයි
Tue Aug 07, 2018 12:21 pm by Ethical Trader

» සිංගප්පූරු ගිවිසුමෙන් අපනයන වාසියක් නැහැ – මහ බැංකු අධිපති
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» Sri Lanka to miss IMF forex reserve target; seek waiver
Mon Aug 06, 2018 10:45 am by The Invisible

» Sri Lanka targets lower forex reserves for end 2018
Mon Aug 06, 2018 10:43 am by The Invisible

» Sri Lanka economy to grow 4.0-pct in 2018
Mon Aug 06, 2018 10:42 am by The Invisible

» More curbs on cars as Central Bank battles trade gap
Mon Aug 06, 2018 10:40 am by The Invisible

» What Sri Lanka can do to improve the credibility of its dollar soft-peg
Mon Aug 06, 2018 10:39 am by The Invisible

» Sri Lanka's Hayleys Fabric back in profit in June quarter
Sun Aug 05, 2018 12:11 am by spw19721

» Sri Lanka keeps rates unchanged
Fri Aug 03, 2018 6:10 pm by Ethical Trader

» Sri Lankan shares end up 0.1-pct, foreigners buy NTB
Fri Aug 03, 2018 6:08 pm by Ethical Trader

» Sri Lanka sharply raises tax on small hybrid cars
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» Sri Lanka inflation accelerates to 5.4-pct in July
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» බදු ඉහළට. Wagon R, Japan Alto, Spacia ඇතුළු පොඩි කාර් මිල වැඩිවෙන්නේ මෙහෙමයි
Fri Aug 03, 2018 1:28 pm by කිත්සිරි ද සිල්වා

» India police hunt eight men after sex attack on goat
Wed Aug 01, 2018 1:04 pm by slstock

» Yes, we Khan!
Wed Aug 01, 2018 1:03 pm by කිත්සිරි ද සිල්වා

» ඡන්ද කටේ ,කුලියාපිටියේ ඇදෙන Volkswagen කතාවේ ඇත්ත තත්ත්වය මෙහෙමයි
Wed Aug 01, 2018 7:46 am by serene

» Should CSE be like this? Whose FAULT is it?
Tue Jul 31, 2018 8:24 pm by spw19721

» ලෝකය යා කරන චීන ඉදිකිරීම් වේගවත් කරන යෝධ යන්ත්‍ර
Tue Jul 31, 2018 6:08 pm by Ethical Trader

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Tue Jul 31, 2018 5:49 pm by Ethical Trader

» Happy Birthday
Mon Jul 30, 2018 10:27 pm by serene

» Whats ailing Sri Lanka ? Why we are what we are!
Mon Jul 30, 2018 5:48 pm by Ethical Trader

» Lunar Eclipse
Sun Jul 29, 2018 10:56 am by Ethical Trader

» ගුවන් යානා තුළ මකුණන් සිටීමට හේතුව කාලගුණය බව 'එයාර් ඉන්දියා' සමාගම පවසයි
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»  Woman finds frog parts in her packet of 'kottu'
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Sri Lanka's rupee showings signs of stabilizing: Central Bank

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Sri Lanka's rupee showings signs of stabilizing: Central Bank

Post by The Invisible on Fri May 11, 2018 7:17 pm

ECONOMYNEXT - Sri Lanka's central bank said the rupee was showing signs of stabilizing, after the rupee came under pressure from money printed from late March to enforce lower interest rates, with the latest data showing that there was a surge in private credit in the month.

"The Central Bank intervened in the domestic foreign exchange market to mitigate excessive volatility in the exchange rate, and the rupee has shown signs of stabilisation" the monetary authority said in its May policy statement.

On Thursday the rupee closed at 157.80/158.10, a new low.

Data showed that private credit in March surged to 122 billion rupees the highest since the 158 billion reached in October 2015 during the height of the last balance of payments crisis.

In March 2017 banks only loaned around 80 billion rupees.

State enterprises and the government had borrowed another 43 billion rupees, data showed.

The central bank terminated repo deals and then tens of billions of rupees through reverse repo auctions to enforce rates as low as 7.6 percent after overnight rates spiked towards its 8.75 percent ceiling rate, which was cut to 8.50 percent.

The central bank then allowed the exchange rate to float, despite having tens of billions of excess liquidity in the system, after a seasonal demand of money for the New Year ended.

Amid interventions, which have so far been unsterilized excess liquidity fell to 0.7 billion rupees on May 10, from 31 billion rupees on April 25.

The central bank has also been mopping up excess liquidity through repo auctions. Amid dollar sales however the volumes mopped up fell to 2.36 billion rupees on May 10 from 10 billion rupees on May 02.

A central bank can successfully defend a currency with unsterilized sales, if it allows liquidity to reduce and rates to move up.

The pressure on a currency peg comes when banks borrow printed money from the central bank to lend.

If more money is injected to keep rates down as dollars are sold (sterilized intervention), more forex reserves could be lost.

The central bank has also been using moral suasion on forex dealers, but analysts say moral suasion must be used on banks borrowing from liquidity windows to lend to customers.

If the March credit spike is temporary, pressure on the rupee may ease, analysts say. Sri Lanka's central bank operates a soft-pegged exchange rate regime. (Colombo/Ma11/2018)
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The Invisible

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