ECONOMYNEXT – Sri Lanka saw offshore inflows into its government securities for the 10th straight week ended on November 21, the Central Bank data showed.
Analysts said investors speculate a rate cut by the central bank during this week’s Monetary Policy Review meeting scheduled for late on Tuesday. The latest monetary policy rates will be announced on Wednesday (27).
They said some investors have been buying to make some profits due to appreciation of the rupee currency and fall in market interest rates.
Sri Lanka witnessed 702 million rupees ($2,38 million at 1 US dollar = 295 LKR) inflow into government securities in the week ended on November 21, extending the total inflows into treasury bonds and bills to 16.2 billion rupees (($55 mln) in the 10 straight weeks, the official data showed.
The value of government securities held by foreign investors was at 55,545 million rupees by November 21.
“Foreign investors had been expecting a policy rate cut in this week’s Monetary policy meeting and further possibility of rupee appreciation.This will allow them to have capital gains on their investment ,” a currency dealer told EconomyNext.
Analysts say Sri Lanka’s deflationary policies have helped to see inflows amid curtailed imports.
The new inflows also come after Sri Lanka saw a strong mandate given to Marxists Janatha Vimukthi Peramuna (JVP) leader Anura Kumara Dissanayake in the parliament elections on November 14.
The President’s party has pledged to end deep rooted systematic corruption in Sri Lanka.
The island nation has not changed its policy directions since Dissanayake was elected.
Dissanayake’s Janatha Vimukthi Peramuna-led National People’s Power (NPP) won 159 seats in the 225-member parliament and analysts have said the strong win could boost the investor confidence as it has not made any drastic policy changes or deviate from the International Monetary Fund loan programme.
Sri Lanka suffered a foreign outflow of 66 percent or 78.1 billion rupees worth government securities in the first nine months of this year. (Colombo/November 25/2024)
