by charith666lk Today at 5:55 am
» i feel admin huge loose
by Teller Today at 4:00 am
» hexp and Mercedes Benz
by Teller Today at 3:50 am
» Humble request
by EquityChamp Today at 12:26 am
» Wt abt reef and mfl????
by hiransilva23 Yesterday at 11:59 pm
» NAVF Risk free....
by hiransilva23 Yesterday at 11:49 pm
» SFL N, SFL P , HOT HOTTER, HOTTEST ON.......!
by hiransilva23 Yesterday at 11:42 pm
» I bought reef . n today 18/04/16
by EquityChamp Yesterday at 11:38 pm
» සංචාරක පැමිණීම 11% කින් ඉහළට
by kcrRanz Yesterday at 11:21 pm
» GSP+ ගැන තීරණාත්මක සාකච්ඡාවක් 11 වැනිදා බ්රසල්ස් හිදී GSP+ ගැන තීරණාත්මක සාකච්ඡාවක් 11 වැනිදා බ්රසල්ස් හිදී
by kcrRanz Yesterday at 11:19 pm
» Rupee up on IMF loan, bond issue boost
by kcrRanz Yesterday at 11:13 pm
» Pan Asia Banking Corporation PLC has posted a profit after tax (PAT) of Rs. 304 million for the quarter ended March 31, 2016 (1Q’16) recording a 72% growth - Target price is above Rs 35.00
by kcrRanz Yesterday at 11:12 pm
» COCO - silent gem
by reader Yesterday at 10:46 pm
» Hotel sector Analysis -KHL
by kidman Yesterday at 10:26 pm
» What happen ESL ??????
by devinda Yesterday at 10:23 pm
» Why SEMB at the same level.
by MRBRAVO Yesterday at 10:08 pm
» KAPI FUTURE
by kasun333 Yesterday at 9:51 pm
» Richard Pieris & Company PLC (RICH)
by dsam Yesterday at 9:41 pm
» SKY IS THE LIMIT FOR LLUB
by Ryan Hudson Yesterday at 9:37 pm
» WAPO Hidden Gem and Ready to Mega Bull
by Madu@1 Yesterday at 9:09 pm
» HVA highest return stock
by anjelo Yesterday at 8:48 pm
» HDFC FUTURE soon this will hit 70++++ Dr also collecting these days
by kidman Yesterday at 8:39 pm
» FUTURE GEMS - Kind help
by crnsuranjith Yesterday at 8:25 pm
» HVA HVA ??????
by anjelo Yesterday at 8:18 pm
» Unmoved fundamental stocks moving
by Trend Yesterday at 8:02 pm
» HVA- Expect a 4.5 million PLUS share trade day this week!!!
by ddrperera Yesterday at 7:55 pm
» HEXP is attractive
by crnsuranjith Yesterday at 7:48 pm
» UNION BANK (UBC)
by crnsuranjith Yesterday at 7:35 pm
» WAPO going up again..
by Jaya sri Yesterday at 7:01 pm
» Malaysian palm price falls to near 2-month low on declining export demand
by Chinwi Yesterday at 6:06 pm
» WARREN BUFFET ON STOCK MARKET - FOOD FOR THOUGHT
by crnsuranjith Yesterday at 5:52 pm
» T BILL AUCTION - 04-05-16 - YIELD INCREASE
by PRABASH84 Yesterday at 4:52 pm
» fall is more
by Pac-man Yesterday at 4:28 pm
» Saneepai nada
by Pac-man Yesterday at 4:28 pm
» JV between WAPO and SEAF US - CSE announcement
by kidman Yesterday at 4:19 pm
» HVA foods 8/- sure tomorrow
by hiransilva23 Yesterday at 3:31 pm
» WAPO - target Price 75 +++++++
by Winner123 Yesterday at 3:31 pm
» RICH GOOD BUY?
by Opportunity Yesterday at 2:44 pm
» CINV.N000- Hidden gem
by A+ Yesterday at 2:32 pm
» ACME playing
by A+ Yesterday at 2:19 pm
» As Volatility Rises, Follow These Four Criteria To Pick Great Stocks For Today And Tomorrow
by VALUEPICK Yesterday at 2:07 pm
» Market heading for cooling-off
by samaritan Yesterday at 2:06 pm
» Are Frontier Markets the ‘New’ Emerging Markets?
by VALUEPICK Yesterday at 1:48 pm
» NZ dollar extends decline after China lowers yuan fixing
by VALUEPICK Yesterday at 1:46 pm
» Australian Dollar’s Big Drop
by VALUEPICK Yesterday at 1:43 pm
» KAPI has some strong signals
by newer1 Yesterday at 1:37 pm
» Selll Selll
by Pac-man Yesterday at 1:01 pm
» PRICES GO UP-JAPANESE VEHICLES
by worthiness Yesterday at 12:38 pm
» 11 in a row Red Red Red ................(Yahapalanaya)
by skyfall Yesterday at 11:51 am
» The End Trap of JKHW23
by CSE VIJAY Yesterday at 11:16 am
» What Is a "Strong" Balance Sheet?
by VALUEPICK Yesterday at 10:44 am
» ABL - next gems
by Madu@1 Yesterday at 10:39 am
» Big HVA run very soon...
by anjelo Yesterday at 10:37 am
» TAFL A SILENT GIANT !!!!
by kassachandimal Yesterday at 10:34 am
» LLMP.N and LLMP.X winning stock
by Arsh2012 Yesterday at 10:34 am
» THUMBS UP FOR A MEGA BULL RUN FROM TOMORROW
by samaritan Yesterday at 9:34 am
» GRAN GRAN .......BUY
by EPS Yesterday at 9:11 am
» LANKA IOC PARTNERS SRI LANKA CRICKET
by samaritan Yesterday at 8:55 am
» don't missed sfl.n/p
by Pac-man Yesterday at 8:21 am
» Karabuwa move to SFL.P
by Pac-man Yesterday at 8:20 am
» FOR KARUNA ???
by charith666lk Yesterday at 7:01 am
» Rupee up on IMF loan, bond issue boost
by fireshelter Yesterday at 5:57 am
» what about REXP and HEXP?
by Tissa Yesterday at 5:13 am
» HEALTH SECTOR ANALYSE -EC SIR
by Joe007 Yesterday at 3:25 am
» What about ORIENT FINANCE PLC(BFN.N0000)?
by Gainer Yesterday at 12:20 am
» Sri Lanka stock exchange to use quarterly earnings for price multiples
by VALUEPICK Tue May 03, 2016 11:52 pm
» World Textiles Awards name Textured Jersey ‘Dyer & Finisher of the Year’ - See more at: http://www.ft.lk/article/539387/World-Textiles-Awards-name-Textured-Jersey--Dyer---Finisher-of-the-Year-#sthash.MULOE2Bv.dpuf
by kcrRanz Tue May 03, 2016 10:33 pm
» Ravi K confident of $ 2 B ADB support ........
by kcrRanz Tue May 03, 2016 10:31 pm
» RICH RICH RICH
by Mubin Mustafa Tue May 03, 2016 9:38 pm
» VONE Analysis Target price 35+
by ddrperera Tue May 03, 2016 8:10 pm
» VONE win with VONE
by ddrperera Tue May 03, 2016 8:08 pm
» KCAB - Kelani Cables
by wallstreetguy Tue May 03, 2016 7:41 pm
» TO DIMANTHA MATHEW --> SO CALLED RESEARCH EXPERT
by nimantha80 Tue May 03, 2016 6:05 pm
» Changing the method of calculating PE,BPV, D/Y
by DANIDU Tue May 03, 2016 5:17 pm
» HVA Lovers
by Thushara Ayya Tue May 03, 2016 2:43 pm
by tori.kumara Tue May 03, 2016 2:19 pm
» JKH PRICE PREDICTION
by cseguide Tue May 03, 2016 2:14 pm
» KELANI CABLES PLC(KCAB.N0000)
by Beta1 Tue May 03, 2016 1:38 pm
» COMB very very bearish
by Mr. Belfort Tue May 03, 2016 1:27 pm
» Some Market Surprises So Far This Year
by sikka89 Tue May 03, 2016 1:19 pm
» Ukraine poses wheat export threat
by VALUEPICK Tue May 03, 2016 1:00 pm
» Aussie Tumbles as RBA Rate Cut Wrong-Foots Bullish Hedge Funds
by VALUEPICK Tue May 03, 2016 12:48 pm
» Ceylon Grain Elevators - A Value Rich Stock
by EquityChamp Tue May 03, 2016 12:42 pm
» Benchmarking Richard Pieris Exports with Hayleys Fibre
by EquityChamp Tue May 03, 2016 12:12 pm
» Monorail project: proposals to be presented to Cabinet - See more at: http://www.dailymirror.lk/108935/Monorail-project-proposals-to-be-presented-to-Cabinet
by fireshelter Tue May 03, 2016 11:56 am
» LCEM CONCRETE SURE...
by Mubin Mustafa Tue May 03, 2016 10:41 am
» Experts Pls give your thoughts about VFIN
by SLFINANCEWATCH Tue May 03, 2016 10:09 am
» Collect LGL, LIOC, HDFC, ALUM & VFIN before you miss the train..
by SLFINANCEWATCH Tue May 03, 2016 10:08 am
» HAYLEYS FIBRE PLC(HEXP.N0000)
by visvajith Tue May 03, 2016 9:19 am
» ADB UPBEAT ON SRI LANKA'S GROWTH
by samaritan Tue May 03, 2016 8:43 am
» හෙට ගන්න හොද මොනවාඩ
by Jaya sri Tue May 03, 2016 8:02 am
» what are the shear holder benefit good company
by Brinthan Mon May 02, 2016 11:15 pm
» On the verge of 6500
by fireshelter Mon May 02, 2016 11:10 pm
» JKH Broken 155 Lets Prepare for the JKH Rally
by fireshelter Mon May 02, 2016 11:07 pm
» Technically time to exit
by fireshelter Mon May 02, 2016 10:32 pm
» KAPI FUTURE PRICE
by Shammi Dharshana Mon May 02, 2016 9:49 pm
» Predict One share to earn 50% Return
by Harry82 Mon May 02, 2016 8:11 pm
» karabuwa like GRAN
by sameboy Mon May 02, 2016 7:50 pm
» which May rally had more crowd?
by Yahapalanaya Mon May 02, 2016 7:33 pm
Fitch said in an report on the outlook on Sri Lankan banks that loan to deposit ratios of some banks with "less mature deposit franchises" are approaching 100 percent.
Loan to deposit ratios have risen from about 77 percent by end-2010 to 80 percent by June 2011. By September loan to deposit ratios of banks tracked by Fitch had risen to 90 percent.
Sri Lanka's Central Bank started to defend a dollar peg actively from around July by selling foreign exchange to banks in return for rupees as credit growth picked up and put pressure on a dollar soft peg.
The foreign exchange interventions caused liquidity shortages, forcing rates up, even though there has been no formal raising of policy rates.
Fitch said deposit rates have risen and bank net interest margins were shrinking.
To prevent rates rising further, the Central Bank offset or 'sterilized' interventions in the forex market by purchasing Treasury bills including from banks and injecting liquidity (printing money) in to money markets.
The liquidity fuels new credit, triggering fresh imports, resulting in further reserve losses, creating a vicious cycle of expansionary sterilized interventions.
Balance of payments crisis are a problem associated with so-called 'soft-pegged' central banks which try to target an exchange rate and then also tries to control interest rates by printing money.
Fitch said banks have been selling down liquid assets held largely in the form of government securities which are gradually channelled into lending, though lenders have to keep at least a 20 percent liquid asset to total liabilities ratio to meet regulations.
The Central Bank held 180 billion rupees of Treasury bills in its domestic asset portfolio by January 2012 from near zero in July 2011 as balance of payments pressure gathered pace.
Banks are now paying as much as 12 percent or more for customer deposits but 3-month Treasury bills yield as little as 8.67 percent and 12-month bills only 9.30 percent creating an incentive to get rid of Treasuries.
LBO's economics column warned over five months ago that banks were not raising enough deposits to fund rising credit growth and that the country was heading towards a balance of payments pressure and rates have to be allowed to move up fast to prevent the peg breaking.
"There is a persistent imbalance between loans made and deposits raised by the banking system, indicating that a market clearing interest rate is needed to maintain the peg to the US dollar," LBO's economics columnist fussbudget warned in August.
"To head off any 'balance of payments' problem the central bank has to weaken the rupee or allow interest rates to go up. If neither happens, credit expansion is on track to crash land in the balance of payments."
When banks raise deposits consumption is curbed (reducing pressure on the forex market) and only that 'demand' is released as credit.
But when Treasury bills are sold to the Central Bank, newly printed money is expansionary generating new aggregate demand and pressure on the peg through imports.
"Deteriorating loan to deposit ratios and declining liquid assets demonstrates in practice how this phenomenon works through the balance sheets of banks," LBO's economics columnist fuss-budget says.
"It is also interesting to note that the decline in liquid assets is the first step of how a currency crisis transforms into a banking crisis.
"The emerging trends in the banking system should be carefully noted and not forgotten so that interest rates are allowed to move up in the future without delay so as to head off episodes to balance of payments pressure as soon as credit growth becomes too strong."
A fully fledged banking crisis happens when interest rates rise and remain at levels for long enough so that it no longer makes sense for businesses to borrow and they start to default and bad loans mount.
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Do you think foreign funds will hold back equity purchases in anticipation of another devaluation?
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