20 October, 2021

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Sri Lanka Banks Stop Quoting Rupee Spot Rate After Cbank Request

(Reuters) – The Sri Lankan rupee market came to a standstill on Tuesday as banks stopped quoting spot prices against the 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 was traded at 133.70/134.20 by 0500 GMT per dollar and closed at 133.60/80, dealers said.

Though many banks stopped quoting spot prices in early trade on Monday, the 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.

The Colombo Stock Exchange’s main index edged down 0.44 points to 4,989.99, its lowest since June 14.

Turnover was 8.08 billion rupees ($60.52 million), more than eight times higher than this year’s daily average turnover of 990.1 million rupees, boosted by several block deals in conglomerate Aitken Spence.

Spence, which accounted for 87 percent of the total day’s turnover, closed steady at 111 rupees.

Foreign investors were net buyers of 685.9 million rupees worth of shares on Tuesday, extending the net foreign inflow so far this year to 23.32 billion rupees. ($1 = 133.5000 Sri Lanka rupees) (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Ron Popeski)

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    Both in Sinhala and Tamil there is a saying you cannot hide an elephant in a rice (hand) separator. The real value of the Rupee
    is sliding downwards for over an year despite the sinister tactics of our two economic Czars in fooling the ruling clique. Ex-Central Banker
    Dr. Wijewardena is quoted elsewhere as agreeing with recognised global financial specialists this talk of Sri Lanka being a middle income country is yet another fanciful invention of the duo. We are right at the bottom above a few basket cases.

    Senguttuvan

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      Quite right, they are borrowing and borrowing and borrowing. A 1 Billion dollar bond issue (which is a code word for borrowing), is planned and just this week there was the issue of Sri Lanka Development Bonds (SLDBs) for US$ 150 million which the Cenral bank claimed was oversubscribed by 1.5 which of course would be the case since banks stand to profit from the exercise – which is getting riskier. This current bond/ debt issue is to stop the on going free fall of the rupee for a few weeks.. There there will be need for more borrowing.. Lanka is in a DEBT TRAP. The fact is that there needs to be austerity: cut backs on the Rajapakse tamashas and spending spree on white elephant infrastructure funded by the Chinese who should be asked to cancel the debt owed by Lanka. Under performing enterprises like Mihin air and Sri Lankan shut down. The only funds spent should be on wage increases for govt sector employees while ALL hiring in the public sector should be frozen. This will have to be done sooner of later or the IMF will be restructureing the debt after the rupee crashes. Either way there will be a political costs for the coming economic misery because of the Criminal clown at the Central Bank who only knows to borrow and bankrupt Lanka.

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    The UNP MUST call for the interdiction of Nivard Cabraal and the $1 Billion Bond issue that he is planning to further indebt Lankans and crash the rupee MUST BE STOPPED before it is too late. Of course international banks which stand to make good money out of this bond issue will be happy to collaborate with the Central Bank (as they did in the indebting of so many eurozone countries which are now in debt and facing a massive economic crisis.)
    Cabraal simply does not have the knowledge, skills and expertise to get Lanka out of the financial mess he has put the country into and MUST BE FIRED. Also he has committed fraud and lies and hence must be interdicted and strand trial for financial crime, for fixing the figures, painting rosy pictures about a non-existent country, and waste of public funds that a pilfered by him and the Rajapakse family including the Chairman of Sri Lankan Air Lines. Sri Lanka is in fact a low income country and NOT a middle income country. The poverty line and numbers should be calculated accordingly and then we will know the true poverty count.
    2. Where has all the borrowed money gone? Aside from the visible white elephant devlepment projects in Hambantota and a few roads and bridges built in the northeast, the money has gone into Rajapkses’s pockets through Corruption the hidden signifier in the S&P assessment of the economy. Corruption of the Rajapakses family may be broken down in three parts 1) military Business for Gota the Goon who controls the swollen defense budget and is building among other things golf courses for MILITARY BUSINESS 2) TOURISM BUSINESS for Basil and cronies. 3) SPORTS BUSINESS FOR THE BRAT NAMAL AND SHASINDSRA (car races, beach games, rugby seven,Carlton Sports Chanel). These are the sectors of the Rajapakse business empire enabled by transfer of public funds and accumulating national debt which is converted into PRIVATE WEALTH OF THE RAJAPAKSE FAMILY, that are single handedly looting Sri Lanka and indebting the people.

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