The Sri Lankan Rupee offers at 199.90 against the US dollar in the spot and futures markets
ECONOMYNEXT – Sri Lanka’s foreign exchange market was mostly inactive on Tuesday at the start of trading, as the rupee was nominally spot bid until about 6 months ahead at 199.90 for the US dollar with no bids, have participants said a day after a de facto non-credible parity was lowered to 202 from 190.90.
Unusual market phenomena that deeply interest students about central bank policy errors were observed in Sri Lanka’s foreign exchange markets from 2020 onwards, when unprecedented volumes of money were printed as per the saying “ modern monetary theory ”.
From around the second half of 2020 forward exchange rates have been negative despite a record balance of payments deficit resulting mainly from outflows from financial accounts as the interest rate differential between the rupee and the dollar turned negative .
On Monday, small volumes were traded at around 202 fixed points attributed to the forex market after devaluation from an unreliable earlier peg at 199.90, market participants said.
Banks were offering $ 202 dollars for change, wire transfers and business transactions on Tuesday at the same fixed price of 202 rupees on their websites on Tuesday.
On Monday, the rupee was traded at 198/202 per US dollar in the spot market after an unreliable peg of 199.95 was lowered to 202 per US dollar.
In the secondary market, bond yields remained lackluster, but buying sentiment on short tenor maturities continued, brokers said.
Bonds due 12/15/2022 were listed at 7.60 / 65 percent on Tuesday, compared to 7.55 / 65 percent on Monday.
Bonds due 11.15.2023 were listed at 6.25 / 30 percent Tuesday from Monday’s close.
Bonds due 12.15.2024 were listed at 6.60 / 70 percent on Tuesday, down from 6.62 / 67 percent at Monday’s close.
A bond maturing on 01.05.2025 was listed at 7.00 / 10% on Tuesday, against 7.00 / 20% on Monday.
A bond due 01.02.2026 was quoted at 7.35 / 40% on Tuesday, against 7.30 / 40% on Monday.
A bond maturing 10/15/2027 was listed at 7.65 / 95 percent, wider than 7.70 / 90 percent on Monday.
A bond due 01.09.2028 was listed at 7.85 / 8.00 percent on Tuesday. (Colombo / May 11, 2021)