CBSL stops Protecting Rupee

From Ceylon Today

Ceylon Finance Today: Central Bank of Sri Lanka (CBSL) let go of protecting the rupee this week, with 'spot next' being quoted at Rs 144.35 to the US dollar in interbank spot trading yesterday, while there were 'spot' bids at Rs 144.10 both yesterday and on Monday, market sources told Ceylon FT.

Nevertheless, it's not clear whether any trades were done at the new spot prices, they said. Demand, however is building up, the sources said. Previously, CBSL, using the twin instruments of moral suasion and selective selling of dollars from its foreign reserves at the administered spot price of Rs 144, thereby didn't allow the exchange rate to fall below the Rs 144 level.

In related developments, one week forwards weakened to Rs 144/55/65 in two way quotes with trades being executed at the Rs 144/55 level around 4.15 pm yesterday, sources told this reporter. On the previous day, around 4.30 pm, two way quotes in one week's forwards were 'going' at Rs 144/45/50 (See yesterday's Ceylon FT).

Meanwhile, with excess liquidity getting tight, it had allegedly fallen to Rs 19 billion yesterday, treasuries, in secondary market trading, saw their yields increase by between five to 10 basis points, the sources said.