Sri Lanka forex markets in a spot

Redbulls · 1 Sri Lanka forex markets in a spot Tue Jun 26, 2012 5:42 pm

Redbulls

Director - Equity Analytics

Posts : 6053
Equity Stars : 16263
Reputation : 770
Join date : 2012-02-14

June 26, 2012 (LBO) - Sri Lanka's spot foreign exchange markets were inactive Tuesday with no two way quotes following earlier regulatory pressure, though the market for transactions with settlement three days ahead, became active, dealers said.

So-called 'spot' market deals are settled two days later. 'Spot next' or deals settled three days later, were quoted at around 133.80/134.40 rupees to the US dollar Wednesday.

On Monday the spot market became inactive following regulatory pressure on Friday, dealer said. The spot dollar weakened to near record lows though a state bank was selling around 132.90 rupees, dealers said.

The rupee has officially fallen to around 133.60 levels earlier in June.

On Wednesday the spot next market became active though there was no apparent pressure to reverse any deals done on Monday, dealers said.
http://lbo.lk/fullstory.php?nid=285132901

sriranga

sriranga

Co-Admin

Posts : 6822
Equity Stars : 23228
Reputation : 2855
Join date : 2011-02-01
Location : London

The Sri Lankan rupee market came to a standstill on Tuesday as banks stopped quoting spot prices against U.S. dollar, after what dealers said was a request from the central to stop trading the ailing currency beyond the 133 level.

“The whole market is distorted as central bank does not like to see the spot trading above 133.00. So nobody is quoting spot and everybody quotes spot-next,” a dealer said on condition of anonymity, referring to the possible spot rate a day later.

Four other currency dealers confirmed the move and said there were no deals done in the market during the first two hours of the day.

The rupee’s spot-next traded at 133.70/134.20 by 0500 GMT per dollar, dealers said.

Though many banks stopped quoting spot prices in the early trade on Monday, a state bank dollar sale at 132.90 provided direction to the market and some banks traded spot at that rate.

Banks stopped quoting spot rates on Monday after the monetary authority had told the dealers not to trade above 133.00.

Central Bank Governor Ajith Nivard Cabraal declined to comment.

The rupee hit a record low of 133.60 on June 12. It has lost some 17 percent of its value since last November, Reuters reports.
http://adaderana.lk/news.php?nid=18592

Antonym · 3 Re: Sri Lanka forex markets in a spot Tue Jun 26, 2012 10:54 pm

Antonym

Vice President - Equity Analytics

Posts : 1090
Equity Stars : 7645
Reputation : 275
Join date : 2011-02-09

sriranga wrote:
Banks stopped quoting spot rates on Monday after the monetary authority had told the dealers not to trade above 133.00...
Central Bank Governor Ajith Nivard Cabraal declined to comment.

For how long will the CBSL prop up the LKR artificially?
This will worsen the problem in the short term. Inward remittances would slow down, in anticipation of a further decline.