COLOMBO – Foreign inflows into Sri Lanka government securities were steady in the week ended October 23 after the country saw inflows for five straight weeks, Central Bank data showed.
Foreign exchange analysts said the excess liquidity in the market and some speculations over another monetary policy rate cut before the end of this year have led to offsetting the inflows as some foreign investors sold their holdings last week.
Sri Lanka witnessed one million rupees (nearly $3,390 at 1 US dollar = 295 LKR) inflow into government securities in the week ended on October 23, much lower than the previous week’s inflow of 495 million rupees ((1.7 mln), official data showed.
The value of government securities held by foreign investors and funds was at 51,143 million rupees last week, with little change from the previous week’s 51,143 million.
“There is speculation that the Central Bank might cut the rates again before the end of this year. The excess liquidity in the market also signals the return on government securities is going to be less in the future,” a currency dealer said.
Analysts say Sri Lanka’s deflationary policies have helped to see inflows amid lowering market lending rates and appreciation in the rupee currency with curtailed imports.
Sri Lanka saw an inflow of 11.82 billion rupees in the five straight weeks ended on October 16, official data showed.
The inflows also come after Sri Lanka witnessed a peaceful presidential election that saw Marxist Janatha Vimukthi Peramuna (JVP) leader Anura Kumara Dissanayake become president for a five-year term.
Sri Lanka, however, suffered a foreign outflow of 66% or 78.1 billion rupees worth of government securities in the first nine months of the year.
-ecnomynext.com
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