Foreigners buy Govt. securities in Nov.: CB

Tuesday, 3 December 2013 01:17 - - {{hitsCtrl.values.hits}}

Non-national holding up 20.5% year to date to $ 479 m REUTERS: Foreigners bought into Sri Lankan Government securities in November for a second month, according to Central Bank data, but it was still down from July’s record levels as some offshore investors withdrew in expectation of the US monetary stimulus tapering. Foreign holdings were Rs. 479.1 billion ($ 3.65 billion) at the end of November, compared with Rs. 475.1 billion by October end. They hit a peak of Rs. 503.1 billion in July and have jumped 20.5% so far this year. Foreign investors find Sri Lankan Government securities attractive because of the more than 10% rate of return. Many have invested in long-term treasury bonds, which have an illiquid market. The rupee currency dropped as much as 6% between 7 June and 28 August, as foreign investors started exiting from government securities after US Federal Reserve chief Ben Bernanke hinted in May of tapering its bond buying. But foreign buying in short-term treasury bills in July boost offshore holdings to a record high. The rupee has stabilised after hitting a record low of Rs. 135.20 on 28 August. It has gained more than 3% since then. Sri Lanka’s Central Bank has allowed foreigners to buy 12.5% of the total government securities. As at end-November, foreign investors held 12.8% of total outstanding government securities. The Central Bank has said the threshold of 12.5% should be met by end-2013.

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