Conversions are made, based on the current, administered spot.....price of the US dollar which is Rs 133.70 per dollar.
Currently there is pressure for the rupee to depreciate, which CB is preventing by adopting the two pronged approach of moral suasion and selling dollars from its foreign reserves at spot price on selected trades to the foreign exchange market. Depreciating pressure is caused due to the culmination of import demand and foreign investors exiting from the stock and Treasury (T) Bill and T Bond markets respectively.
Meanwhile, currently, market's excess liquidity is Rs 123.5 billion. Of this figure, CB's T Bill holdings comprise 48.82% or Rs 60.3 billion of this number. But, CB enhancing excess liquidity by buying T Bills only raises demand side inflationary pressure on the economy, thereby hitting the poor and the fixed wage earner the hardest.
But with excess liquidity over the Rs 100 billion mark, the weighted average rate (WAR) of call money remained unchanged at 6.12%, while that of the WAR of overnight market repo transactions marginally increased by one basis point to 5.79% at the end of yesterday's trading.
Courtesy: Ceylon Financial Times 21 May 2015