CB holds rates at record lows as expected

Saturday, 13 December 2014 00:00 - - {{hitsCtrl.values.hits}}

(Reuters): The Central Bank kept key policy rates steady at record lows for an 11th straight month on Friday, as expected, saying past policy measures have helped to achieve the economic growth target of 7.8% for this year.

“We see credit growth picking and economic growth at the same level we had targeted,” Central Bank Governor Ajith Nivard Cabraal told Reuters after the rate decision. “All the numbers are telling us that there is no need for much changes at the moment.” The Central Bank left the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) unchanged at 6.50% and 8.00%, respectively. Most analysts had expected policymakers to keep rates steady of an 8 January presidential election. Cabraal said annual inflation in December is likely to remain unchanged from last month’s 1.5%, as the positive impact of lower fuel prices is expected to offset by rise in vegetable prices. Private sector credit growth, which fell to more than four-year lows in July, picked up for a third straight month to 5.1% year-on-year in October, from 4.6% a month earlier. The Central Bank said in a statement that policies adopted by the Government and the Central Bank have helped keep the economy on track to achieve growth projections for the year, in spite of adverse weather and uncertain global conditions. The Central Bank will announce its overall policy measures for 2015 in the first two weeks of January.

Bourse slips as election worries weigh

(Reuters): Stocks ended slightly weaker on Friday for the second straight session, led by beverage and diversified shares as investors remained cautious ahead of a 8 January presidential election. The main index ended 0.1%, or 6.97 points, lower at 7,236.37. Turnover was Rs. 511.7 million ($ 3.90 million), provisional data showed. “There was not much retail activity, trading was very low ahead of holidays and the election,” said First Capital Equities Ltd. research manager Dimantha Mathew. Lion Brewery Plc, which led the fall in the overall index, closed 2.7% weaker while conglomerate John Keells Holdings Plc fell 0.75%. Analysts expect volatility to continue and the index to remain flat until the election. Nineteen candidates, including President Mahinda Rajapaksa and former Health Minister Maithripala Sirisena, the consensus candidate of a united opposition, submitted their nominations on Monday. Eleven members of Rajapaksa’s United People’s Freedom Alliance, including Sirisena, have defected after the snap election was called last month, while two Opposition legislators have joined the ruling party. Speculation over more defections has weighed on sentiment, analysts said. Rajapaksa’s election for a third term had seemed assured but has looked more of a challenge since Sirisena announced his candidature. Neither of the main candidates have announced their policies.

Rupee forwards end tad weaker on mild importer dollar demand

(Reuters): Rupee forwards closed a tad weaker on Friday as mild importer dollar demand in late trade outpaced greenback sales by exporters and inflows from inward remittances, dealers said. The currency is expected to gain due to a fall in seasonal imports and on inflows from remittances ahead of the Christmas and New Year, dealers said. The four-day forwards or spot-next-next, which were actively traded, closed at 131.98/132.03 per dollar, compared with Thursday’s close of 131.96/132.00. “There was dollar demand from importers in late trade,” a currency dealer said. The spot currency and three-day forwards, or spot-next, were not traded after the central bank capped the currency at predetermined levels to prevent volatility, traders said. Central Bank officials were not available for comments. Dealers said they expect the rupee to strengthen from next week onwards through to the year end. Overseas investors sold a net Rs. 3.75 billion worth of government securities during the week ended 10 December. They sold a net Rs. 43.9 billion ($ 334.86 million) worth in the 11 weeks through 10 December, data from the Central Bank showed.