ECONOMYNEXT – Sri Lanka’s secondary market closed inactive with zero transactions on Tuesday (05) market participants said while the rupee was quoted at 310 rupees against US dollar in commercial banks.

Commercial Banks were offering to sell dollars for telegraphic transfers at 310 rupees and buy between 295-300 rupees on Tuesday.

Dealers said the market did not have a proper two-way spot quote on Tuesday.

The central bank indicative spot rate was 307.78 rupees on Tuesday, down from 310.85 rupees in the previous day.

Central Bank’s telegraphic transfer dollar rate was at 293.2/303.5 on Tuesday, down from 289.7/299.9 on Monday.

Sri Lanka’s rupee has been made more flexible but a clean float has not yet been established.

In the secondary market, there were no active bond rates.

“There was not even a single transaction in the market today,” a market dealer said.

Market participants said investors were waiting for some form of stability.

“The secondary market yield curve remained broadly unchanged as the market participants opted to be on the sidelines amidst the prevailing political uncertainty,” First Capital said in its market note.

Over the weekend Sri Lanka saw anti-government protests spread across the country demanding the ruling government to step down for its mismanagement as the economic crisis throttled the common man.

Many government officials including the central bank governor Ajith Nivard Cabraal and ministers have tendered their resignation.

Following Cabral’s resignation, a monetary policy meeting that was scheduled to take place on April 05 was postponed.

Analysts say this was an important meeting in which rates were expected to be hiked further after inflation hit 18.7 percent in March.

The rate hike would have reduced money printing and domestic private credit.

Analysts had warned of triple defaults unless urgent action is taken to tighten monetary policy and restore a working exchange rate regime.

Nandalal Weerasinghe, the former Deputy Governor of the central bank is said to take over the governorship on April 07. (Colombo/Apr5/2022