Sunday, 25 October 2020 11:33

SL Business & Finance Review

Sri Lanka accorded precedence to constitutional reforms ignoring economic down turn amid the Covid -19 second wave by enacting controversial 20 th amendment to the constitution during the week ending Friday 23.

Parliament approved a constitutional amendment that will concentrate power with the president and allow duel citizens to hold political office, which could strengthen President Gotabaya Rajapaksa’s familial political clout.

Sri Lankan Stock market recorded early gains to end little changed on Friday, dragged by losses in materials and consumer staples stocks, while government bonds fell after the United States asked the country to review its China ties.

The benchmark stock index closed 0.05% lower at 5,768.94. The bourse fell 3% in the past week and is down 5.9% for the year so far.

Ceylinco Insurance Plc and Nawaloka Hospitals Plc were the biggest boosts to the index, rising 2.8% and 11.5%, respectively.

Central bank announced that it is keeping policy interest rates unchanged in October with signs of credit picking up, and the impact of a Coronavirus outbreak expected to be short-lived.

Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank will be maintained at their current levels of 4.50 per cent and 5.50 per cent, respectively, thereby continuing the prevailing accommodative monetary policy stance..

Sri Lanka’s 06 and 12 month Treasury bill yield fell below the floor policy rate of 4.5 per cent at Wednesday’s Treasury auction, data from the state debt office showed, amid a spike in liquidity.

The debt office which is a unit of the central bank offered 40 billion rupees of bills and sold 40 billion, with more than the offer in 12-month bills being sold.

The debt office said it sold 14.6 billion rupees in 6-month bills at an average yield of 3.87 per cent down from 4.71 per cent a week earlier.

Another 25.3 billion rupees of 12 – month bills were sold at an average yield of 4.13 per cent, down from 4.99 per cent last week.

On October 20 excess liquidity in the banking system increased from 175 billion rupees to 210 billion rupees, and the central bank’s Treasury bill stock jumped to 501 billion rupees from 457 billion rupees.

Sri Lanka’s finance and leasing companies (FLCs) would be hurt further from the risk of a ‘second wave’ of Coronavirus while import controls would hurt their growth, but most have capital to absorb losses, Fitch rating agency disclosed on Wednesday 21

On the same day Softlogic Finance, a licensed non-bank lender said it had received the nod from the Colombo Stock Exchange to raise 1.9 billion rupees from a rights issue of shares to shareholders.

On Friday23, India’s ICICI Bank Limited has been given approval to close down its business in Sri Lanka’s capital Colombo, Central Bank announced.



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