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Central Bank (CB) apparently responding to Ceylon FT's article yesterday that CB is subsidizing foreigners by selling "spot" dollars at the subsidized price of Rs 134 to the US dollar, weakened the exchange rate by 20 Sri Lanka cents (SLc) to Rs 134.20 yesterday, sources told Ceylon FT.
But that hasn't mitigated demand, the sources said. CB sells dollars at those price from its foreign reserves to the market based on banks' net open positions and the submission of import documents.
The market however is dealing in three months forwards at the administered price of Rs 136.04 to the dollar. This is higher by 24 SLC over yesterday's closing price.
Nevertheless, on a case by case basis, CB is allowing buyers to trade at higher prices than at Rs 136.04 in three months forwards with sellers, they said. It was only last month that three months forwards were going at the higher Rs 138 price level, they said.
It appreciated since, not due to any exporter conversions, but due to CB's intervention in the foreign exchange market, beginning by first offering dollars in "spot" trades at Rs 133.90 to the dollar at the start of the month, before gradually depreciating it to where it now stands, ie at Rs 134.20 to the dollar. CB conducts its trades on "spot" prices.
Courtesy: Ceylon Financial Times 19 June 2015
But that hasn't mitigated demand, the sources said. CB sells dollars at those price from its foreign reserves to the market based on banks' net open positions and the submission of import documents.
The market however is dealing in three months forwards at the administered price of Rs 136.04 to the dollar. This is higher by 24 SLC over yesterday's closing price.
Nevertheless, on a case by case basis, CB is allowing buyers to trade at higher prices than at Rs 136.04 in three months forwards with sellers, they said. It was only last month that three months forwards were going at the higher Rs 138 price level, they said.
It appreciated since, not due to any exporter conversions, but due to CB's intervention in the foreign exchange market, beginning by first offering dollars in "spot" trades at Rs 133.90 to the dollar at the start of the month, before gradually depreciating it to where it now stands, ie at Rs 134.20 to the dollar. CB conducts its trades on "spot" prices.
Courtesy: Ceylon Financial Times 19 June 2015
