Foreign holdings of Govt. securities up 20% in 2013
Thursday, 16 January 2014 00:00
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Reuters: Foreign holdings of Sri Lankan Government securities rose 20%in 2013, but were still down from July’s record levels as some offshore investors withdrew their funds ahead of expected US monetary stimulus tapering.
Foreign holdings totalled Rs. 477.4 billion ($ 3.65 billion) as of 1 January, compared with Rs. 397.6 billion at end-2012, Central Bank data showed They jumped 47.3% in 2012 and hit a peak of Rs. 503.1 billion in July.
Offshore investors sold a net Rs. 1.68 billion worth government securities in December, data showed.
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, even though it is 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 of short-term Treasury bills in July boosted offshore holdings to a record high.
The rupee has stabilised after hitting a record low of 135.20 on 28 August, gaining more than 3.4% since then. But it fell 2.5% last year.
Sri Lanka’s Central Bank has allowed foreigners to buy 12.5% of the total Government securities.
As at 1 January, foreign investors held 12.78% of total outstanding Government securities. The Central Bank had earlier said the threshold of 12.5% was to be met by end-2013.
