The Investor Sentiment - Equity and investments forum for Sri Lankans
Search
 
 

Display results as :
 


Rechercher Advanced Search

Latest topics
» Dividend Announcement
Yesterday at 11:13 pm by Afourer

» Thread for News on CSE and SL Economy
Fri Feb 22, 2019 8:42 pm by ruwan326

» MTD WALKERS - KAPI
Fri Feb 22, 2019 8:33 am by ruwan326

» SHL.N0000 (Softlogic Holdings PLC)
Wed Feb 20, 2019 8:23 am by ruwan326

» Importance of 2019 government budget
Tue Feb 19, 2019 12:13 pm by කිත්සිරි ද සිල්වා

» Emir of Qatar on a private visit to Sri Lanka till February 22
Tue Feb 19, 2019 11:19 am by Backstage

» SAMP.N0000 (SAMPATH BANK PLC)
Tue Feb 19, 2019 5:26 am by lanka

» Happy Birthday
Mon Feb 18, 2019 12:27 pm by smallville

» දේවදත්තගෙන් අපායේ සිට මෛත්‍රී බුදුන් වහන්සේට එවන ලද ලිපිය...~~~
Fri Feb 15, 2019 8:24 am by ruwan326

» REXP.N0000 ( RICHARD PIERIS EXPORTS PLC)
Fri Feb 15, 2019 4:57 am by serene

» CONN.N0000
Wed Feb 13, 2019 8:09 pm by ruwan326

» SERV - The Kingsbury
Wed Feb 13, 2019 8:08 pm by ruwan326

» TPL.N0000 (TALAWAKALE PLANTATIONS )
Wed Feb 13, 2019 7:53 pm by ruwan326

» KVAL.N0000
Wed Feb 13, 2019 7:36 pm by ruwan326

» MGT.N0000
Wed Feb 13, 2019 7:29 pm by ruwan326

» HAYC - Haycarb
Wed Feb 13, 2019 7:24 pm by ruwan326

» DIPD.N0000 (Dipped Products)
Wed Feb 13, 2019 7:22 pm by ruwan326

» HAYL.N0000 Hayleys PLC
Wed Feb 13, 2019 7:16 pm by ruwan326

» අනං මනං! #/+?.<>
Wed Feb 13, 2019 7:55 am by කිත්සිරි ද සිල්වා

» මහජනතාව බල ගැන්වෙම්න් සිටී…
Tue Feb 12, 2019 8:23 pm by ruwan326

» VFIN - where the journey leads it?
Mon Feb 11, 2019 7:35 pm by ruwan326

» PLC.N0000 ( People's Leasing and Fiance PLC)
Mon Feb 11, 2019 7:31 pm by ruwan326

» LFIN - LB Finance
Mon Feb 11, 2019 7:25 pm by ruwan326

» Sri Lanka urged to develop own narrative of China’s BRI
Mon Feb 11, 2019 2:50 pm by Backstage

» Wonder why men send photos of their genitals? Here are some theories
Mon Feb 11, 2019 11:01 am by Backstage

» Flying is the Safest mode of Transport
Sat Feb 09, 2019 8:12 am by කිත්සිරි ද සිල්වා

» LLUB.N0000 (CHEVRON LUBRICANTS LANKA PLC)
Thu Feb 07, 2019 2:24 pm by Ethical Trader

» Lanka named top tourist destination for 2016
Wed Feb 06, 2019 2:29 pm by කිත්සිරි ද සිල්වා

» A Bit of History
Wed Feb 06, 2019 2:18 pm by ruwan326

» AMF.N0000
Thu Jan 31, 2019 6:56 am by serene

» IOC Sri Lanka unit December quarter loss widens to Rs987mn
Mon Jan 28, 2019 11:02 am by ruwan326

» මූර්ත පොළියෙන් ශ්‍රී ලංකාව අංක 1ට – බ්ලූම්බර්ග් අනාවරණය කරයි
Mon Jan 21, 2019 7:18 pm by nihal123

» Obituary Notice.
Mon Jan 21, 2019 7:14 am by කිත්සිරි ද සිල්වා

» Trading Journal
Sun Jan 20, 2019 5:53 am by serene

» LDEV - Lankem Developments
Fri Jan 18, 2019 2:11 pm by ruwan326

» විශිෂ්ඨ සිල්ලර වෙළෙන්දෙකුගේ ජීවිත කතාව
Thu Jan 17, 2019 12:15 pm by Ethical Trader

» AAIC.N0000
Wed Jan 16, 2019 9:50 pm by serene

» இனிய பொங்கல்
Tue Jan 15, 2019 9:15 pm by nihal123

» HUNA.N0000
Mon Jan 14, 2019 5:29 pm by Ethical Trader

» Blessing in Disguise!! It's high time Brothers!!
Sun Jan 13, 2019 11:35 am by serene

» Thread for News on Local and Foreign Politics
Sat Jan 12, 2019 8:26 am by ruwan326

» කෝටි 4620 ක බැඳුම්කර නීතියට පිටින් ශ‍්‍රී ලංකන්ට දීලා
Mon Jan 07, 2019 6:18 pm by Ethical Trader

» JINS.N0000 ( Janashakthi Insurance PLC)
Sun Jan 06, 2019 1:12 pm by smallville

» Thread for News on International Markets
Fri Jan 04, 2019 9:40 am by The Invisible

» අවුරුද්ද අප කයි - අපි අවුරද්ද කමු (ජනවාරි පළමුවැනිදා)
Tue Jan 01, 2019 6:23 pm by malanp

» සැන්ඩි එපා!
Tue Jan 01, 2019 6:01 pm by serene

» අසිරිමත් සුබ නව වසරකට ආසිරි !
Tue Jan 01, 2019 5:08 pm by PANTOMATH

»  වසරක කාලය තුළ ඉන්දියාවේ ඉහළම ආදායම් ලාභීන්
Mon Dec 31, 2018 2:47 am by nihal123

» අයදුමේ දී ඡායාරූප ‘ඇලවීම‘ අවශ්‍ය නැති ජාතික හැඳුනුම්පත ජනවාරි 01 සිට දිවයිනටම
Sun Dec 30, 2018 9:37 pm by lanka

» මැදපෙරදිගට පමණක්‘ පාස්පෝට් මින් ඉදිරියට නැහැ
Thu Dec 27, 2018 5:18 pm by Ethical Trader

February 2019
SunMonTueWedThuFriSat
     12
3456789
10111213141516
17181920212223
2425262728  

Calendar Calendar

Disclaimer


Information posted in this forum are entirely of the respective members' personal views. The views posted on this open online forum of contributors do not constitute a recommendation buy or sell. The site nor the connected parties will be responsible for the posts posted on the forum and will take best possible action to remove any unlawful or inappropriate posts.
All rights to articles of value authored by members posted on the forum belong to the respective authors. Re-using without the consent of the authors is prohibited. Due credit with links to original source should be given when quoting content from the forum.
This is an educational portal and not one that gives recommendations. Please obtain investment advises from a Registered Investment Advisor through a stock broker

Sri Lanka widens bank dollar trading positions

Go down

Sri Lanka widens bank dollar trading positions

Post by The Invisible on Fri Oct 12, 2018 6:34 am


ECONOMYNEXT - Sri Lanka has widened dollar trading positions of some banks, market participants said, which were recently slashed amid a run on the rupee triggered by a spike in unsterilized excess liquidity.

Cuts in the so-called NOPs (net open positions) have led to heightened volatility of the rupee in the past, according analysts who have closely studied policy errors of the central bank.

A wider NOP allow foreign exchange flows from day-to-day to be matched without altering the monetary base, making Sri Lanka's credit system behave like a floating regime.

A narrower NOP requires greater central bank intervention to keep a currency stable. Intervention by the central bank alters the monetary base, making the exchange regime behave like a peg.

But dollar purchases by the central bank at current rates will inject permanent liquidity, peg the currency and undermine a float.

Though the credit system now has a large liquidity shortage which can absorb some injections, the actual damage of central bank dollar purchases in the market will be done by creating an opinion among exporters an opinion that the current exchange is justified and is not an overshoot.

Analysts have also said that NOPs can be linked to liquidity positions of banks on the basis that banks that borrow printed money from the central bank, should not be entitled to hold dollars with such money.

This will encourage banks to run plus liquidity positions in the long term and not fund credit with window money.

However the current large liquidity shortage is coming from a policy error of the central bank involving a hedging deal on a loan taken by National Savings Bank in 2013.

The monetary policy of the central bank is now supportive of the rupee. Overnight interest rates are near the 8.50 percent ceiling policy rate.

On Wednesday 3-month Treasury bill yields rose sharply to 9.38 percent.

In the past, the central bank has made currency pressure turn into full-blown balance of payments crisis by injecting 3-month printed money at subsidized rates into the banks, by intervening in bill auctions which can be loaned customers to generate more pressure on the rupee.

Analysts say laws should be brought to prohibit the central bank from injecting money below the Sri Lanka Interbank Offered Rate of that tenor to maintain economic stability and preserve the welfare of the people, especially when the rupee is under pressure.

Sri Lanka's rupee is unstable due to the lack of a consistent or market based operating regime, involving targeting either the interest rate (floating rate) or the exchange rate (peg) consistently. (Colombo/Oct11/2018)





The Invisible
The Invisible

Posts : 878
Join date : 2016-11-28
Age : 39

Back to top Go down

Re: Sri Lanka widens bank dollar trading positions

Post by serene on Fri Oct 12, 2018 7:36 am

Thanks Invinsible.
But hard to digest.
Could anyone explain this in simple terms in therena bashawen.

serene
Top contributor
Top contributor

Posts : 4238
Join date : 2014-02-26

Back to top Go down

Back to top


 
Permissions in this forum:
You cannot reply to topics in this forum