Inflation ( CCPI)0.9% (March 2024)
GDP4.5% (4Q 2023)
Unemployment4.3% (4Q 2023)
3M T-Bill Rate9.90%
12M T-Bill Rate10.21%
2Y T-Bond Rate10.85%/ 11.00%
4Y T-Bond Rate12.10% / 12.20%
USD/LKR298/299
Reserves $4.951Bn (March 2024)
Cum. Trade Deficit $860 Mn (Feb 2024 cumulative)
Cum. Fiscal DeficitLKR 2,020 Bn (Nov 2023)

Counter party limits increase the settlement risk of money market transactions

Bank & FinanceNov 14, 2022
Counter party limits increase the settlement risk of money market transactions

Banks and PDs have to borrow from CBSL pledging Government Securities for short-term liquidity requirements despite the positive overall market liquidity. This occurs because some banks find it difficult to borrow from other banks due to the number of limitations.

It can be observed over LKR 333Bn money lend to CBSL overnight basis at 14.50% by banks, while another set of banks borrows LKR 618Bn from CBSL overnight basis at 15.50%. This mismatch seems to be growing as banks’ counterparty limits are exhausted.

Disclaimer

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