FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

LISTED COMPANIES

Submit Post


ADVERTS

Poll

EXCHANGE RATE PREDICTION: 2022

Sri Lanka firms with billions in trade credits exposed as rupee falls Vote_lcap16%Sri Lanka firms with billions in trade credits exposed as rupee falls Vote_rcap 16% [ 43 ]
Sri Lanka firms with billions in trade credits exposed as rupee falls Vote_lcap21%Sri Lanka firms with billions in trade credits exposed as rupee falls Vote_rcap 21% [ 57 ]
Sri Lanka firms with billions in trade credits exposed as rupee falls Vote_lcap30%Sri Lanka firms with billions in trade credits exposed as rupee falls Vote_rcap 30% [ 83 ]
Sri Lanka firms with billions in trade credits exposed as rupee falls Vote_lcap34%Sri Lanka firms with billions in trade credits exposed as rupee falls Vote_rcap 34% [ 93 ]

Total Votes : 276

ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



Latest topics

» LOLC FINANCE PLC (LOFC.N0000)
by sojsilva Sat Nov 26, 2022 10:07 am

» Sri Lanka bond yields extend fall on DDR comments
by K.R Fri Nov 25, 2022 11:32 pm

» What will happen tomorrow?
by K.R Thu Nov 24, 2022 7:56 am

» CENTRAL INDUSTRIES PLC (CIND.N0000)
by ErangaDS Wed Nov 23, 2022 6:34 pm

» KZOO.N SHAW WALLACE INVESTMENTS PLC TP 10/
by cheetah Wed Nov 23, 2022 11:16 am

» SUNSHINE HOLDINGS PLC (SUN.N0000)
by ErangaDS Wed Nov 23, 2022 6:53 am

» SRI LANKA TELECOM (SLTL.N0000) - Reawakening the Giant
by Equity Win Tue Nov 22, 2022 12:10 pm

» EXTERMINATORS PLC (EXT.N0000)
by ErangaDS Tue Nov 22, 2022 10:35 am

» Focus on Government controlled entities
by K.R Sun Nov 20, 2022 10:45 am

» Singapore based Kreate Design to invest USD 1 Billion to Colombo Lotus Tower
by K.R Sat Nov 19, 2022 1:40 pm

» China working with other lenders on ‘easing’ Sri Lanka debt
by K.R Sat Nov 19, 2022 1:31 pm

» Billionaire owned listed companies faces insolvency issues in Sri Lanka
by God Father Sat Nov 19, 2022 10:11 am

» Wahts going on with Expo
by sanjayaK Fri Nov 18, 2022 2:23 pm

» REGULATORS - DUTY OF CARE
by God Father Fri Nov 18, 2022 1:47 pm

» CIC going to next level
by suku502 Wed Nov 16, 2022 12:51 pm

» PEOPLE'S INSURANCE PLC (PINS.N0000)
by K.R Tue Nov 15, 2022 8:03 pm

» LANKA HOSPITAL + SRI LANKA TELECOM + HOUSING DEVELOPMENT COOPERATION
by nish84 Tue Nov 15, 2022 4:29 pm

» SEYLAN DEVELOPMENTS PLC (CSD.N0000)
by Thushara Ayya Tue Nov 15, 2022 10:16 am

» Budget Analysis 2023 - KPMG Sri Lanka
by CHRONICLE™ Tue Nov 15, 2022 9:17 am

» HAPUGASTENNE PLANTATIONS PLC (HAPU.N0000)
by Dilshan2020 Tue Nov 15, 2022 8:39 am

EXPERT CHRONICLE™

MARKET CHAT


ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

LATEST TWEETS

You are not connected. Please login or register

FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Sri Lanka firms with billions in trade credits exposed as rupee falls

Sri Lanka firms with billions in trade credits exposed as rupee falls

Go down  Message [Page 1 of 1]

CITIZEN

CITIZEN
Manager - Equity Analytics
Manager - Equity Analytics


[size=18]ECONOMYNEXT – Companies with suppliers’ credit and dollar debt are facing large forex losses as the Sri Lanka rupee falls steeply after two years of unusual money printing to keep interest rates down as budget deficits expanded.
In the stock market, punters have been betting on exporters and also companies with overseas operations and assets, which will see translation gains as the domestic currency inflates according to the monetary policy.
Hotels and export firms also have dollar loans but are hedged with future dollar revenues as repayments fall due.
Domestic firms which could raise prices as the rupee falls could also potentially get more future rupee revenues to dollars to repay foreign debt.
However, suppliers’ credits are short term and face an immediate loss especially if stocks have been sold already based on a too low exchange rate.
If a company with suppliers’ credit still has stocks to match the credits, the firm could price up the products and get more rupees to buy dollars.
Forex Exposure
Financial intermediaries say many firms including unlisted firms are stuck with unsettled credits.
“As of the year-end, the Group has a significant amount of foreign currency outstanding trade debts due to foreign suppliers, on which any adverse fluctuations in the exchange rates would have a material impact on the Group’s profits,” Executive Director, Chief Executive Officer of publicly-traded Ceylon Grain Elevators told shareholders when the latest quarterly accounts were released.
CGE said as of December 2021 it had 28.3 million dollars of trade dues which was 5.7 billion US dollars at the exchange rate then prevailing.
On December 31, 2021, the rupee was around 203 to the US dollar. The rupee has since fallen to around 265 to the US dollar valuing the debt at 5.7 billion US dollars.
Over the fears of the rupee falling soon, some companies also avoided bringing down stocks as they had done in the past.
Adrian Basnayake, the Past President and Council member of the Sri Lanka Chamber of the Pharmaceutical Industry said a shortage of drugs in the country caused by forex shortages was intensified by fears of getting down stocks and being unable to pay on time.
“Let’s say we get to open an LC for 203 rupees,” Basnayake told reporters before the rupee was allowed to fall according to the monetary policy stance.
“Usually we settle prices after around three months after importing the medicine. But if the Dollar rate has increased to 245 rupees within that three months, who will bear that cost?
“We do not have the capacity to cover that cost. Due to this, importers stop importing and that is another reason for the lack of medicine in the market.”
The rupee has since fallen below 245 to US dollars.
Trade Credits
According to official data trade credits rose steeply over 2021. From January 2021 to September 2021, trade credits went up by 478 million US dollars.
Firms cleared goods, sometimes with support from parent companies to keep the population supplied with foods and other goods as dollars as forex shortages emerged. Many banks stopped issuing letters of credit as they could not settle them on time.
“Many companies resorted to usance bills and suppliers credit to clear goods,” a financial sector source said.
“They had priced goods at dollar rates ranging from 230 to 260 to the US dollar. But the rupee is weaker and they will book a bigger loss. Now there are some dollars available to pay but at higher prices.”
But exporters who have given credit to buyers stand to gain, at least in rupees.
Sri Lanka has had currency troubles ever since a money-printing central bank was set up in 1950 abolishing a currency board that had kept the country safe during two World Wars and the Great Depression.
The central bank blew up 11 months of reserves collected over 85 years of the currency board and started blaming budgets for external trouble.
Classical economists and analysts have called for an overhaul of the monetary law to tie the hands of activist monetary boards by law so that they cannot engage in Keynesian stimulus with a peg and blow the balance of payments apart and credit economic instability and social unrest. (Colombo/Mar16/2022)

[/size]
Leave a Comment
[size]
Your email address will not be published. Required fields are marked *

Comment
Name *
Email *
Save my name, email, and website in this browser for the next time I comment.






MOST VIEWED
HEALTH
Sri Lanka firms with billions in trade credits exposed as rupee falls Sinopharm_COVID-19_vaccine_2021_K-e1617008045646
Rapid drop in COVID-19 cases in Sri Lanka, but officials caution against complacency
2 mins read

ENERGY
Sri Lanka firms with billions in trade credits exposed as rupee falls Lioc_sm
Lanka IOC raises fuel prices to record high
2 mins read

BUSINESS
Sri Lanka firms with billions in trade credits exposed as rupee falls Petrolshedsm
Sri Lankan transport service providers struggle after sharp fuel price hikes
2 mins read

ECONOMY
Sri Lanka firms with billions in trade credits exposed as rupee falls W-A-Wijewardene-lg
Sri Lanka has to raise policy rates to contain inflation, help rupee: Wijewardena
2 mins read

ECONOMY
Sri Lanka firms with billions in trade credits exposed as rupee falls Gazette-export-M22
Sri Lanka allows exporters to pay local suppliers in dollars
2 mins read


Sri Lanka firms with billions in trade credits exposed as rupee falls Lineandarrow

[/size]

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum