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Sri Lankan rupee depreciates against USD, British pound and Indian rupee by more than 10%

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Food inflation recorded at 11.5 percent in August 2021

Given the cross currency exchange rate movements, the Sri Lankan rupee (LKR) depreciated against the US dollar by 10.1 percent, against the pound sterling (GBP) by 11.4 per cent and the Indian rupee by 10.3 per cent, during the year up to 03rd September 2021, the Weekly Economic Indicators report released by the Statistics Department of the Central Bank of Sri Lanka showed.

Referring to the Real Sector, the report said.” CCPI based headline inflation (Y-o-Y) increased to 6.0 per cent in August 2021 from 5.7 per cent in July 2021 due to monthly increases observed in prices of items in both Food and Non-food categories.”

“Food inflation (Y-o-Y) and Non-food inflation (Y-o-Y) recorded at 11.5 per cent and 3.5 per cent, respectively, in August 2021.”

“During the first half of 2021, domestic tea production increased notably in comparison to the corresponding period of the previous year owing to favourable weather conditions and prices.”

“Production of rubber also increased in response to high market prices while coconut production increased considerably due to the lagged effect of favourable weather conditions prevailed during latter part of 2020.”

“During the period under review (28.08.2021 to 03.09.2021), crude oil prices were on a largely upward trend. Prices were driven by supply concerns due to Hurricane Ida in the United States and on concerns of OPEC+ members regarding any further output increases amid the fourth wave of COVID-19 in some countries. Prices were also supported by favorable weekly employment data from the United States highlighting demand side recovery.”

“Overall, both Brent and WTI prices increased by US dollars 0.18 per barrel and US dollars 1.12 per barrel,

respectively, during the period,” the report said.

As for the Monetary Sector it said: “Weekly AWPR for the week ending 03rd September 2021 increased by 7 bps to 6.01 per cent compared to the previous week.”

“The reserve money increased compared to the previous week mainly due to the increase in deposits held by the

commercial banks with the Central Bank.”

“The total outstanding market liquidity was a deficit of Rs. 181.720 bn by the end of this week, compared to a surplus of Rs. 13.263 bn by the end of last week.”

“By 03rd September 2021, the All Share Price Index (ASPI) increased by 4.31 per cent to 9,316.65 points and the S&P

SL 20 Index increased by 4.47 per cent to 3,494.76 points, compared to the index values of last week.” the report said.

The Statistics Department noted that the gross official reserves were estimated at US dollars 2,805.9 million as at end July 2021.



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SLT-MOBITEL donates fourth PCR machine to Matara District Hospital

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Group Chairman of SLT-MOBITEL Rohan Fernando handing over the donation to Deputy Director of Matara District Hospital Upali Ratnayake accompanied by Dr.Thushara Vidanapathirana, Dr.Deepika Priyanthi and Group CEO of SLT-MOBITEL Lalith Seneviratne.

Recognising the importance to enhance Sri Lanka’s PCR testing capacity to curtail the spread of COVID-19 and to protect citizens, SLT-MOBITEL continues its support by donating yet another vital PCR machine to the District General Hospital in Matara recently.

The donation of the PCR machine valued at over Rs. 5.7 million is part of SLT-MOBITEL’s ‘Sabandiyawe Sathakaraya’ CSR initiative in further strengthening the nation’s healthcare systems and assisting communities in need.

The equipment was handed over to the Deputy Director of the Matara Hospital Doctor Upali Rathnayaka in the presence of Rohan Fernando, Group Chairman, SLT-MOBITEL; Lalith Seneviratne, Group Chief Executive Officer, SLT-MOBITEL; Kiththi Perera, CEO, SLT; Shashika Senarath, CMO, Mobitel along with Regional GM, SLT; Regional Head – Mobitel and Hospital Staff.

Previously, PCR machines were donated to the Base Hospital, Karawanella, District General Hospital, Matale and the University Hospital of the Kotelawala Defense University. SLT-MOBITEL appreciates the support received from all Sri Lankans towards ‘Daana Paaramitha’ which was conceptualized as a platform to further increase community involvement in carrying out relief efforts to support families affected by the pandemic.

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Extension of lockdown negatively impacts CSE

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By Hiran H. Senewiratne

CSE trading activities commenced yesterday in a lacklustre manner with little share-buying interest and later on became negative following the government’s announcement on the lockdown extension until October 1, stock market analysts said.

The Colombo International Financial Centre (CIFC) at the Port City was set to commence this month and has been delayed until December owing to the current Covid 19 situation. This also affected CSE trading activities yesterday, analysts said.

Consequently, the stock market lost steam yesterday, closing on a negative note as investor sentiment remained erratic due to internal and external environmental factors. Both indices moved downwards or to negative territory despite healthy turnover in the market. The All Share Price Index went down by 46.09 points and S and P SL20 declined by 17.93 points. Turnover stood at Rs. 3.8 billion with two crossings. Those crossings were reported in Expolanka, where 600,000 shares crossed for Rs. 101.1 million, its shares trading at Rs. 158.50 and Sampath Bank one million shares crossed for Rs. 49.5 million, its shares traded at Rs. 49.50.

In the retail market, some companies that mainly contributed to the turnover were; Expolanka Holdings Rs. 1.2 billion (7.4 million shares traded), JKH Rs. 604 million (4.6 million shares traded), Browns Investments Rs. 540 million (58.3 million shares traded) and Hayleys Rs. 204 million (2 million shares traded).

It is said that following two sessions of gains, the indices closed in the red due to price declines in large-cap stocks as investors opted to book modest returns after the recent sharp rally. Stocks such as Expo, LOLC, and JKH, which saw sharp gains in the past two sessions witnessed profit-taking at higher levels and weighed on the momentum throughout the session.

Further, high net worth and institutional investor participation was noted in Sampath Bank. Mixed interest was observed in Expolanka Holdings, Tokyo Cement Company and LOLC Holdings, while retail interest was noted in Browns Investments, Lanka Orix Finance and Industrial Asphalts. During the day 153 million share volumes changed hands in 24000 transactions.

As of yesterday, the current exchange rate of 1 US dollar was equal to 199.607 Sri Lankan rupees. This is an increase of 7.856656 percent (or +14.5401 LKR) compared with the same time last year (17 September 2020), when 1 US dollar equaled 185.067 Sri Lankan rupees.

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Lockdown takes toll on Sri Lanka’s manufacturing sector activities

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The resurgence of the COVID-19 pandemic in August 2021 has slowed down the manufacturing activities in the country. Accordingly, the manufacturing PMI recorded an index value of 45.1 in August 2021 with a fall of 12.7 index points from the previous month, mainly driven by the decrease in New Orders, Production, Employment, and Stock of Purchases sub-indices. The decline in New Orders and Production, especially in the manufacture of food & beverages, furniture, and textiles & wearing apparel sectors, have mainly contributed to the overall decrease of the manufacturing PMI. Many respondents in those sectors highlighted that their local orders and distribution channels were affected due to the lockdown imposed as a measure of containing the pandemic. Further, many of them also emphasised that factory operations were disrupted due to the spread of the COVID-19 virus among employees. Employment sub-index also declined in line with these developments.

The decrease of Stock of Purchases was in line with the decline in New Orders and Production. Further, the difficulties encountered in placing purchase orders and in settling foreign payments also adversely affected the supply chain of raw materials and production schedules. Many respondents stressed that the continuous increase in the cost of imported raw materials adversely affected their profit margins. Meanwhile, Suppliers’ Delivery Time lengthened at a slower rate in August 2021. The manufacturers cautioned that the uncertainty over the COVID-19 pandemic would continuously hinder the prospects of the manufacturing sector, yet, overall expectations for manufacturing activities for the next three months remained above the neutral threshold.

Services PMI dropped to an index value of 46.2 in August 2021 with the restrictions imposed to contain the further spread of the COVID-19. New Businesses, Business Activity, Employment and Expectations for Activity sub-indices recorded declines. New Businesses decreased in August compared to the previous month mainly with the declines observed in wholesale and retail trade, insurance, real estate, and education sub-sectors. Business Activities across most of the sub-sectors such as, wholesale and retail trade, real estate, insurance and other personal activities reported considerable declines indicating the adverse effects of travel restrictions on their business operations. Nevertheless, transportation sub-sector recorded some improvements solely due to the growth in freight volumes. Moreover, financial services sub-sector also indicated improvements despite the disturbances from travel restrictions. Employment continued to fall at a higher pace as retirements and voluntary resignations exceeded the number of recruitments carried out during the month. Backlogs of Work increased at a higher pace in August along with the reduction in staff availability amid travel restrictions and growing COVID-19 infections of staff. (CBSL)

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