ECONOMYNEXT – The Sri Lankan Rupee continued to be under pressure without active trading at the 203 deemed non-credible, according to market participants, discounts on swaps continued to widen as dollar liquidity tightened, said market participants.
The spot / 1month was quoted around -150 / -80 cents against -90 / -50 on November 11.
Spot / 3months was around -450 / -400 versus 350/300 cents.
Spot / 6 months was -800 / -700 cents.
The swap discount indicates that anyone who trades dollars for 203 rupees will get it back at around 195, despite the strong pressure from the rupee.
In the parallel market, dollars were listed at 238.0 / 239.50 rupees against around 234.50 on November 11.
In the formal market, the US dollar is at 197/203 rupees for guidance, with a few sporadic transactions underway.
Sri Lankan rupee swap discounts widen and some interbank transactions firm
Sri Lanka is not printing as much money as it used to after lifting price controls on bond auctions, but cash is still being pumped at 6.0% overnight to sterilize interventions creating shortages of currencies.
Inflation for the 12-month period ending in November 2021 reached 9.9%.
Last November, the weighted average rate of new deposits was 4.96% and the weighted average rate of fixed deposits was 5.07% when large volumes of money were printed to keep rates at “historic levels”. “.
Economists have warned that inflation will rise in addition to creating immediate currency shortages and loss of reserves. (Colombo / Dec01 / 2021)