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Sorry Mr New Governor! Wrong move! Vote_lcap11%Sorry Mr New Governor! Wrong move! Vote_rcap 11% [ 21 ]
Sorry Mr New Governor! Wrong move! Vote_lcap20%Sorry Mr New Governor! Wrong move! Vote_rcap 20% [ 37 ]
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FINANCIAL CHRONICLE™ » EXPERT CHRONICLE™ » Sorry Mr New Governor! Wrong move!

Sorry Mr New Governor! Wrong move!

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God Father

avatar
Manager - Equity Analytics
Manager - Equity Analytics

Sorry Mr New Governor! Wrong move! 01-cb10

During the last monitory policy review, CBSL increased the interest rates by 7%! This was an unprecedented increase, an increase of almost 100%, compared to previous rate! As a result of this, at 11th April’s treasure bill auction , one year TB rate went upto 24%! 

This is a complete disaster Mr Governor! Do you expect inflation to come down by rincreasing the interest take? Do you expect more dollars to come into the country by increasing the rupee interest rate? Do you expect rupee to strengthen against dollar by increasing the interest rate ? You are wrong! None of this will happen. It’s happening only in text books sir!    

We saw unprecedented inflation in this country last three months , not because of people consume more but because of the scarcity of goods . Prices went up not because of demand over supply, but because of cost of imports were high . Cost of imports went up basically because rupee depreciated and rupee depreciated because there was no dollars available in the market ! Sir , you were out of the country and this was what happened and you came and gave us a nice , conventional , theoretical, text book answer for a complex , unconventional, once in a life time issue ! Wrong answer sir ! This will not bring  inflation down instead it will take inflation up to a different level ! This will not appreciate rupee instead rupee will depreciate further at a faster face ! This will not bring dollers to the country , it will kill exporters and lower the dollar inflows to the country. 

In this country , exchange rate and fuel prices have a direct correlation with inflation. For sure your theory book didn’t teach you that. Do you think that people will stop buying petrol and diesel and instead they will put their money into treasury bills or bank deposits because there is a high interest? Do you think that people will not spend money for their basic needs and instead put that money into bank deposits ? Do you assume that borrowers will not pass this heavy interest cost to the ultimate consumers? Do you assume that bank and lending institutions will not increase their lending rates and bare the additional cost by themselves? Do you assume that majority of the consumers in this country swim on excess cash and consume excessively? All your assumptions , based on which you took  this decision to increase interest rates ,  are wrong !

Sorry to tell you that sir , as a result of this stupid move , medium and micro business sector will get wiped out , our banking and finance system will collapse due to defaults and bad debts , all private sector investments , developments and productio activities will cease and finally our economy will collapse from pan to fire ! 

Sorry Mr New Governor! Wrong move! 33eefb10

When one year treasury bill rates are at 24% , what rate the bank shall offer to the depositors and at what rate the bank shall lend ? Can a business serview at 30% 35% borrowing rate ? When the government treasury bill rate ( which is treated as a risk free return rate ) is at 24% , what must be the expected rate of return of a normal equity investor , businessman, entrepreneur or trader ? What should he do to get that return ? 

Sir you have left , lots of questions unanswered in taking this decision and seriously now we have big question of you itself ! Your knowledge of theories seems to be perfect sir but sorry your practical knowledge seems to be zero ! 

Sir , we chased away one donkey who thought exchange rate can be governed and controlled by gazette notifications . We don’t need to have another mad donkey leading the pack , who thinks internal inflation and currency depreciation can be fully controlled by adjusting interest rate ! We need a wise eagle who sees the full picture and it seems you are not that one !

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Post Sat Apr 16, 2022 1:34 pm by apphunter

I think it is a step in the right direction. This will slow down spending and reduce some demand for imported products. Business will suffer with high finance costs and struggle to survive. High interest rate will bring more money back to banks. It will strengthen the banking sector.

avatar

Post Sat Apr 16, 2022 2:55 pm by samaritan

apphunter wrote:I think it is a step in the right direction. This will slow down spending and reduce some demand for imported products. Business will suffer with high finance costs and struggle to survive. High interest rate will bring more money back to banks. It will strengthen the banking sector.
The Banks lending rates will be exorbitant and probability of individuals and businesses defaulting repayment will increase leading to .......................???

avatar

Post Sat Apr 16, 2022 2:58 pm by target1

Some sectors within the stock market are more sensitive to changes in interest rates compared to others. Depositors are going to get very attractive rates.


Winners
·         Cash rich companies and cash generating companies
·         Financials benefit from higher rates through increased profit margins
·         Senior citizens.


Losers
·         Real estate
·         Companies with high debt
·         Borrowers


කොටස් වෙලඳපොලේ සමහර අංශ අනෙක් ඒවාට සාපේක්ෂව පොලී අනුපාත වෙනස්වීම් වලට වඩා සංවේදී වේ. තැන්පතුකරුවන්ට ඉතා ආකර්ශනීය අනුපාත ලැබෙනු ඇත.
 
ජයග්රාහකයින්
·         මුදල් පොහොසත් සමාගම් සහ මුදල් උත්පාදන සමාගම්
·         වැඩි ලාභ ආන්තිකය හරහා ඉහළ අනුපාතවලින් මූල්‍ය ප්‍රතිලාභ ලබයි
·         ජ්යෙෂ්ඨ පුරවැසියන්
 
පරාජිතයන්
·         දේපළ වෙළදාම්
·         ඉහළ ණය සහිත සමාගම්
·         ණය ගැතියන්

avatar

Post Sat Apr 16, 2022 2:59 pm by samaritan

God Father wrote:
Sorry Mr New Governor! Wrong move! 01-cb10

During the last monitory policy review, CBSL increased the interest rates by 7%! This was an unprecedented increase, an increase of almost 100%, compared to previous rate! As a result of this, at 11th April’s treasure bill auction , one year TB rate went upto 24%! 

This is a complete disaster Mr Governor! Do you expect inflation to come down by rincreasing the interest take? Do you expect more dollars to come into the country by increasing the rupee interest rate? Do you expect rupee to strengthen against dollar by increasing the interest rate ? You are wrong! None of this will happen. It’s happening only in text books sir!    

We saw unprecedented inflation in this country last three months , not because of people consume more but because of the scarcity of goods . Prices went up not because of demand over supply, but because of cost of imports were high . Cost of imports went up basically because rupee depreciated and rupee depreciated because there was no dollars available in the market ! Sir , you were out of the country and this was what happened and you came and gave us a nice , conventional , theoretical, text book answer for a complex , unconventional, once in a life time issue ! Wrong answer sir ! This will not bring  inflation down instead it will take inflation up to a different level ! This will not appreciate rupee instead rupee will depreciate further at a faster face ! This will not bring dollers to the country , it will kill exporters and lower the dollar inflows to the country. 

In this country , exchange rate and fuel prices have a direct correlation with inflation. For sure your theory book didn’t teach you that. Do you think that people will stop buying petrol and diesel and instead they will put their money into treasury bills or bank deposits because there is a high interest? Do you think that people will not spend money for their basic needs and instead put that money into bank deposits ? Do you assume that borrowers will not pass this heavy interest cost to the ultimate consumers? Do you assume that bank and lending institutions will not increase their lending rates and bare the additional cost by themselves? Do you assume that majority of the consumers in this country swim on excess cash and consume excessively? All your assumptions , based on which you took  this decision to increase interest rates ,  are wrong !

Sorry to tell you that sir , as a result of this stupid move , medium and micro business sector will get wiped out , our banking and finance system will collapse due to defaults and bad debts , all private sector investments , developments and productio activities will cease and finally our economy will collapse from pan to fire ! 

Sorry Mr New Governor! Wrong move! 33eefb10

When one year treasury bill rates are at 24% , what rate the bank shall offer to the depositors and at what rate the bank shall lend ? Can a business serview at 30% 35% borrowing rate ? When the government treasury bill rate ( which is treated as a risk free return rate ) is at 24% , what must be the expected rate of return of a normal equity investor , businessman, entrepreneur or trader ? What should he do to get that return ? 

Sir you have left , lots of questions unanswered in taking this decision and seriously now we have big question of you itself ! Your knowledge of theories seems to be perfect sir but sorry your practical knowledge seems to be zero ! 

Sir , we chased away one donkey who thought exchange rate can be governed and controlled by gazette notifications . We don’t need to have another mad donkey leading the pack , who thinks internal inflation and currency depreciation can be fully controlled by adjusting interest rate ! We need a wise eagle who sees the full picture and it seems you are not that one !
Fully agree with you God Father, it makes me wonder whether the country is flooded with economic hit-men? I will not compare them with Donkeys for the simple reason that donkeys are innocent living beings and have better brains!

God Father and Nandun like this post

avatar

Post Sat Apr 16, 2022 7:59 pm by apphunter

samaritan wrote:
apphunter wrote:I think it is a step in the right direction. This will slow down spending and reduce some demand for imported products. Business will suffer with high finance costs and struggle to survive. High interest rate will bring more money back to banks. It will strengthen the banking sector.
The Banks lending rates will be exorbitant and probability of individuals and businesses defaulting repayment will increase leading to .......................???

Banks would repossess the asset or collateral. Sri Lanka has a negative current + capital account so a high-interest rate is needed to reduce this. 

Sorry Mr New Governor! Wrong move! Screen16

It should be noted that not everyone has the risk appetite to become an entrepreneur or businessman. I personally know several people who withdrew their FDs to invest in a business because the interest rates were low and lost a significant portion of their wealth trying to become businessmen. 

Also, the Central Bank bank can only do so much. The government needs to be more fiscally responsible. It needs to cut expenditures like personal remunerations, stop non-essential development activities, and shut down or downsize non-essential loss-making SOEs.

reyaz

Post Sun Apr 17, 2022 12:02 pm by reyaz

Do you know what the ultimate objective is? I ran simulations in my mind only to find out that this narcissism has generated strategies only to drive down property prices and destroy all elites. This paves the way for elite class of other countries to have a hunting spree here... Any thoughts?

avatar

Post Sun Apr 17, 2022 12:46 pm by target1

There will be demand for basic needs(essential items) under the current situation. Better sell gold, USD, real estates and invest in basic things which need mass population to carry out their day to day work.

avatar

Post Wed Apr 20, 2022 11:08 pm by God Father

[size=24]2022 අප්‍රේල් 20 දින අජිත් නිවාඩ් කබ්රාල් විසින් සිදු කරන ලද ප්‍රකාශය[/size]
 
[size=23]2022 මාර්තු 7 වැනි දින මහ බැංකුව විසින් ප්‍රකාශයට පත් කරන ලද විනිමය අනුපාතිකයට වැඩි නම්‍යශීලී බවක් ලබා දීමට ගත් තීරණයේ පසුබිම පැහැදිලි කිරීම සඳහා මෙම ප්‍රකාශය මවිසින් නිකුත් කරනු ලැබේ.[/size]
 
[size=23]2022 මාර්තු 7 වැනි දින “වහාම ක්‍රියාත්මක වන පරිදි,විනිමය අනුපාතිකයෙහි ඉහළ නම්‍යශීලීභාවයක් සහිතව ගණුදෙනු කිරීමට වෙළඳපොළට ඉඩ සැලසනු ලැබේ” යයි  මුදල් මණ්ඩලය විසින් තරණය කරන ලද අතර “විදේශ විනිමය ගනුදෙනු ඒක්සත් ජනපද ඩොලරයට රුපියල්230 කට නොවැඩි මට්ටමක පවතිනු ඇතැයිද මහ බැංකුව අපේක්ෂා කරයි යන බව පවසන ලදී. ඉහත තීරණයට අනුකූලව ඒදිනම මාධ්‍ය වෙත නිවේදනයක්නිකුත් කරන ලදී. යොමුව: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20220307_policy_package_to_support_greater_macroeconomic_stability_s.pdf[/size]
 
[size=23]ඉහත කරුණු අනුව, වෙළෙඳපොළ මාර්ගෝපදේශනයක් ලෙස විදේශ විනිමය ගනුදෙනු සිදු වන්නේ කුමන මට්ටමයන්න පිළිබඳව මුදල් මණ්ඩලයේ අපේක්ෂාව ප්‍රකාශ කරන ලද අතරශ්‍රී ලංකා රුපිය නම්‍යශීලීභාවයට ලක් කිරීමට මුදල් මණ්ඩලය පැහැදිළි තීරණයක් ගෙන ඇති බව පැහැදිලි2022 මාර්තු 7 වැනි දිනට පෙර තිබූ ආකාරයට නිශ්චිත විනිමය අනුපාතිකයක් නියම නොකරමින්මෙම නව විනිමය අනුපාත ප්‍රතිපත්තිය (exchange rate policy) 2022 අප්‍රේල් 8 වැනි දින සිට නව මහබැංකු අධිපතිවරයා සහ නව භාණ්ඩාගාර ලේකම් යටතේ මුදල් මණ්ඩලය දිගටම පවත්වාගෙන යන බව ද පැහැදිලිව පෙනේ. [/size]

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