COLOMBO – Foreign investors have bought Sri Lanka rupee bonds for the second week running ending several months of net selling, official data shows.
Foreign holdings of rupee bonds fell to a low of Rs11.7 billion on September 2, increased to Rs12.6 billion on September 9 and Rs13.5 billion on September 16.
Sri Lanka’s foreign holdings of rupee bond fell from around Rs450 billion at the beginning of 2015 due to monetary instability coming from pro-cyclical liquidity injections and the rupee fell.
Unsound money was deliberately pursued as part of Real Effective Exchange Rate Targeting to keep real wages down and give extra profits to exporters. Bondholders fled with the rupee falling from 131 to 182 to the US dollar in two currency crises.
Sri Lanka’s state minister for money and capital market, Nivard Cabraal has said a forward exchange rate guarantee is to be offered for buyers of rupee bonds.
-economynext.com