Government of Sri Lanka’s (GoSL’s) partial sale of US dollars to the Central Bank of Sri Lanka (CBSL) from the recent proceeds received from China on account of the Hambantota Port lease coupled with net foreign inflows (NFIs) received by the Government Securities Market (GSM), saw net excess liquidity (NEL) uplifted by an amount of Rs 10,199 million (US$ 66.59 million) at Friday’s
Conversions are based on the closing value of the benchmark ‘spot’ as at Wednesday which was Rs 153.15 to the dollar. GoSL recently received a payment of nearly $ 300 million, being the first instalment in the $ 1.1 billion lease of the Hambantota Port to the Chinese. Additionally the GSM received an NFI of Rs 1,983.16 million ($12.95 million) in the week ended Wednesday.Treasury sales of dollars to CBSL are foreign reserves neutral. This transaction with CBSL helped CBSL to retire Rs 21,079 million worth of its face value (FV) Treasury (T)-Bill holdings related to money printing (MP), thereby reducing its FVMP holdings by 69.35 per cent to…
…Rs 11,677.06 million (0.1 per cent of GDP) by the weekend, thus reducing demand pull inflationary pressure.
A year ago CBSL’s FVMP holdings were Rs 165,872.65 million (1.4 per cent of GDP), a decline of 1.3 per cent of GDP since. As a result of the retirement of that portion of CBSL’s MP holdings, market’s net excess liquidity (NEL), …Friday over Thursday declined by Rs 10,880 million (36.21 per cent) to Rs 19,168 million.
A year ago the market was net short by Rs 22,186 million, an increase in NEL by an amount of Rs 41,354 million (negative (-) 186.40 per cent) since.
Due to these developments, GoSL’s money printing borrowing costs fell by Rs 3.14 million (1.58 per cent) to Rs 196.11 million. A year ago such costs were Rs 2,779.27 million, a decline of 92.94 per cent (Rs 2,583.16 million) since.