Money printing passes 100% mark
Ceylon Finance Today: Money printing had the dubious distinction of passing the 100% excess liquidity mark at yesterday's trading, helped by inflows drying up and Central Bank of Sri Lanka's (CBSL's) continuous defence of the rupee amidst depreciating pressure.
Ceylontoday,
2015-08-13 02:00:00
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Money printing passes 100% mark
By Paneetha Ameresekere
Ceylon Finance Today: Money printing had the dubious distinction of passing the 100% excess liquidity mark at yesterday's trading, helped by inflows drying up and Central Bank of Sri Lanka's (CBSL's) continuous defence of the rupee amidst depreciating pressure.
Money printing as a percentage of excess liquidity rose to 103.28% due to these yesterday. When CBSL defendsthe rupee by selling US dollars at discounted prices to the market, in the backdrop that the market is asking for 'higher' rates for its dollar sales, then excess liquidity is drawn down from the money market to buy the required dollars from CBSL's foreign reserves.
This resulted in Rs 2,353.18 million being drawn down from the excess liquidity market yesterday, while at the same time US$ 17.59 million was dissipated from CBSL's foreign reserves to meet such buying commitments of the market. Yesterday's transactions vis-à-vis the money and foreign exchange markets was based on the then spot rate of Rs 133.75 to the US dollar in interbank trading.
CBSL deals in 'spot'. Spot trades are settled two market days after the date of transaction. Yesterday CBSL depreciated the exchange rate to Rs 133.80, the effects of this latest depreciation will be felt by the market only tomorrow.
Money printing or CBSL's lending to the government, reflected by CBSL's book value Treasury Bill holdings, stood at Rs 69,306.69 million at the end of yesterday's trading, whereas market's excess liquidity was at a lower figure of Rs 67,107 million.
As a result of the tight liquidity situation prevailing in the market, the weighted average rates of call money and overnight market repo transactions increased by one and three basis points each to 6.11% and 5.90% respectively.
Ceylon Finance Today: Money printing had the dubious distinction of passing the 100% excess liquidity mark at yesterday's trading, helped by inflows drying up and Central Bank of Sri Lanka's (CBSL's) continuous defence of the rupee amidst depreciating pressure.
Money printing as a percentage of excess liquidity rose to 103.28% due to these yesterday. When CBSL defendsthe rupee by selling US dollars at discounted prices to the market, in the backdrop that the market is asking for 'higher' rates for its dollar sales, then excess liquidity is drawn down from the money market to buy the required dollars from CBSL's foreign reserves.
This resulted in Rs 2,353.18 million being drawn down from the excess liquidity market yesterday, while at the same time US$ 17.59 million was dissipated from CBSL's foreign reserves to meet such buying commitments of the market. Yesterday's transactions vis-à-vis the money and foreign exchange markets was based on the then spot rate of Rs 133.75 to the US dollar in interbank trading.
CBSL deals in 'spot'. Spot trades are settled two market days after the date of transaction. Yesterday CBSL depreciated the exchange rate to Rs 133.80, the effects of this latest depreciation will be felt by the market only tomorrow.
Money printing or CBSL's lending to the government, reflected by CBSL's book value Treasury Bill holdings, stood at Rs 69,306.69 million at the end of yesterday's trading, whereas market's excess liquidity was at a lower figure of Rs 67,107 million.
As a result of the tight liquidity situation prevailing in the market, the weighted average rates of call money and overnight market repo transactions increased by one and three basis points each to 6.11% and 5.90% respectively.
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