by Teller Today at 1:24 am
» Asia securities story
by ifenny Today at 1:12 am
» JKH.W023 FINAL RUN
by ruwan326 Yesterday at 11:56 pm
» JKH.W0023 on 27th Sep 2016
by Upendra Dasanayaka Yesterday at 11:24 pm
» TFC.N and TFC.X
by Gainer Yesterday at 11:11 pm
» SAMP 290 rs
by Bullrunner7 Yesterday at 11:08 pm
» Commercial Bank of Ceylon PLC - Riding through challenges
by kumarweerarathne Yesterday at 10:46 pm
» PHAR going up
by Eugine Fernando Yesterday at 10:03 pm
» what is " above avg" or "below avg" for a share volume at a point?
by omegaplus Yesterday at 9:52 pm
by Brinthan Yesterday at 8:43 pm
» CIFL – Red Signal for investors
by Chinwi Yesterday at 8:27 pm
» Karuna= Ruwan326 = Wisdom78/79=Rosa Mariya=Blue Blooded
by Miss-Sangeetha Yesterday at 7:36 pm
» Dist....and Melstacorp...
by Brinthan Yesterday at 7:21 pm
» AEL with Port City...
by samaritan Yesterday at 7:05 pm
» POLL Needed from the community. Please contribute
by Bale87 Yesterday at 6:59 pm
» The phar 1500 ready to boom
by sisira.wijeweera Yesterday at 6:42 pm
» Please remove the price band on CIFL
by samaritan Yesterday at 5:08 pm
» Galadari going to move up, only 3 % of the total shares (only 15 Million shares) left in the market(97% holding between top 20 shareholders), also after debt is converted into shares, now GHLL is showing GOOD profit, it will reach Rs 20.00.
by Mrs Kudabadu Kularthnae Yesterday at 5:02 pm
» Textured Jersey Lanka PLC - Depreciated Rupee had a very positive impact
by ruwan326 Yesterday at 3:01 pm
» JKH.W0023 (Real Story)
by ruwan326 Yesterday at 2:39 pm
» WHO IS PROMOTING JKH.W0023 REALLY Ruwan326 or Sangeetha
by ruwan326 Yesterday at 12:30 pm
» WHO IS PROMOTING JKH.W0023
by ruwan326 Yesterday at 10:07 am
» FOR ALL MISS IN THIS FORUM
by ruwan326 Yesterday at 9:59 am
» my final decision about JKH.W
by Teller Yesterday at 2:26 am
» AFSL update...
by Gallardo Yesterday at 1:16 am
» ACCESS ENG
by point Fri Sep 23, 2016 7:59 pm
» CIFL......new investor confirmed
by kapifm Fri Sep 23, 2016 6:53 pm
» Karuna please come back to forum.
by Madu@1 Fri Sep 23, 2016 6:41 pm
» Is it the end of JKH.W0023??????
by nimantha80 Fri Sep 23, 2016 4:42 pm
» LOLC in massive Maldives push
by kadik Fri Sep 23, 2016 3:26 pm
» CIFL going to hit 5 according to this news
by sampath.anuradha Fri Sep 23, 2016 2:35 pm
by Gainer Fri Sep 23, 2016 2:04 pm
» buy JKH@ 150/-
by Eugine Fernando Fri Sep 23, 2016 1:47 pm
» HEXP amazing order book
by Miss-Sangeetha Fri Sep 23, 2016 1:05 pm
» Guess what will be the closing prise of JKH.W0023
by troy Fri Sep 23, 2016 12:17 pm
» BFL with Ascending Triangle Pattern now.
by stockback Fri Sep 23, 2016 12:15 pm
» DOLPHIN HOTELS PLC(STAF.N0000)
by visvajith Fri Sep 23, 2016 11:57 am
» CALF more better than GSF
by Gainer Fri Sep 23, 2016 9:57 am
» Dirty Game = JKH W23
by gayanath1983 Fri Sep 23, 2016 9:55 am
» JKH.W0023 LATEST
by Upendra Dasanayaka Fri Sep 23, 2016 9:37 am
» colo.n best best best buy
by TIRAN712 Fri Sep 23, 2016 9:26 am
» MACKWOODS ENERGY (MEL) IPO Price 14.00 and Current Trading Price 3.50
by sa123 Fri Sep 23, 2016 9:24 am
» JKH.W0023 TODAY
by Upendra Dasanayaka Fri Sep 23, 2016 8:49 am
» Clinton Foundation Raked in Cash from Right-Wing Regimes, Corporations and Stock Markets
by Chinwi Fri Sep 23, 2016 8:27 am
» MFL , SFL , CALF
by kasun333 Fri Sep 23, 2016 8:06 am
» what is next Anilana (ALHP)
by Eugine Fernando Fri Sep 23, 2016 7:40 am
» Clinton Foundation May Invest in Sri Lanka
by NaminiInduwara Fri Sep 23, 2016 4:26 am
» Market status as at 15th September
by ShaneMc Fri Sep 23, 2016 3:54 am
» Bullish Counters
by Teller Thu Sep 22, 2016 10:47 pm
» IN THE CASE OF JKHW00023 CONVERSION FAILIURE, JKH BOUNCE BACK TO IT’S PREVIOUS MAJESTY SOONER THAN LATER
by ruwan326 Thu Sep 22, 2016 9:29 pm
» Tomorrow CIFL day
by kapifm Thu Sep 22, 2016 8:16 pm
by sameboy Thu Sep 22, 2016 7:51 pm
» RIP JKh Warrant Game Over Bye Bye
by ruwan326 Thu Sep 22, 2016 7:22 pm
» oh why SEMB එක තැන පල් වෙන්නේ
by MRBRAVO Thu Sep 22, 2016 6:10 pm
» JKH WARRANTS CLOSING PRICE.....
by Gallardo Thu Sep 22, 2016 5:30 pm
» If you have 3 million???
by Mubin Mustafa Thu Sep 22, 2016 4:46 pm
» MD behave like ANIMAL
by chathura123 Thu Sep 22, 2016 2:37 pm
» HIGH TURNOVER TODAY....
by C S E 2015 Thu Sep 22, 2016 1:30 pm
» SFL SFL SFL.N0000
by C S E 2015 Thu Sep 22, 2016 1:29 pm
by C S E 2015 Thu Sep 22, 2016 1:24 pm
» GHLL:N share price and CFL
by sisira.wijeweera Thu Sep 22, 2016 1:01 pm
» Get in to Finance & Bank Shares now
by SLFINANCEWATCH Thu Sep 22, 2016 12:46 pm
» MGT Should move 24+ compairing TJL
by kadik Thu Sep 22, 2016 12:10 pm
» Warrants warning..EC please
by Mubin Mustafa Thu Sep 22, 2016 11:53 am
» watch foe LCEM
by troy Thu Sep 22, 2016 11:52 am
» JKH W23 Is a fire
by Mubin Mustafa Thu Sep 22, 2016 11:26 am
» please buy and read..
by BnP Thu Sep 22, 2016 11:25 am
» JKH.W0023..... 5 more Days remaning
by Upendra Dasanayaka Thu Sep 22, 2016 10:25 am
» HEXP next run to 150 level
by Teller Thu Sep 22, 2016 9:49 am
» ASHO.N000 possible SUBDIVISION
by kadik Thu Sep 22, 2016 9:17 am
» BEST TO BUY CONSIDERING THE BUDGET !!!!
by kassachandimal Thu Sep 22, 2016 9:14 am
» Stock Screening - Identified Valuation Gaps
by EquityChamp Thu Sep 22, 2016 9:14 am
» What make you motivated to buy a stock
by EquityChamp Thu Sep 22, 2016 8:55 am
» Lets see your views on following stocks
by EquityChamp Thu Sep 22, 2016 8:52 am
» Need to evaluate how many members are really sharing in SLEF
by EquityChamp Thu Sep 22, 2016 8:50 am
» I would love to invest in...
by EquityChamp Thu Sep 22, 2016 8:34 am
» FED rates unchanged
by EquityChamp Thu Sep 22, 2016 8:25 am
» HPFL hopes high
by nimantha80 Thu Sep 22, 2016 7:56 am
by sameboy Wed Sep 21, 2016 10:42 pm
» Real volume of JKH.N????
by ruwan326 Wed Sep 21, 2016 8:42 pm
» GRAN React according to Bollinger Band
by stockback Wed Sep 21, 2016 8:21 pm
» CIFL 50 LAK BUYER
by trader7 Wed Sep 21, 2016 7:47 pm
» WARRENT BUFFET CAME TO HIS SEAT JUST NOW
by nimantha80 Wed Sep 21, 2016 5:27 pm
» PABC.N000 Not moving:
by kcrRanz Wed Sep 21, 2016 12:09 pm
» Sampath Bank PLC - A giant awakening
by kassachandimal Wed Sep 21, 2016 9:42 am
» Poll - Ban member id "Karuna" from this forum
by Miss-Sangeetha Wed Sep 21, 2016 9:30 am
» Brokers who gives online trading facility without minimum investment limit..
by Bale87 Wed Sep 21, 2016 9:27 am
» What Is Happening In Lanka Securities??
by EquityChamp Wed Sep 21, 2016 7:14 am
» LIOC not moving
by Truestory Tue Sep 20, 2016 10:45 pm
» Buy now and sell within 2 months
by m2_yapa Tue Sep 20, 2016 10:27 pm
» Capital Alliance online?
by kasun333 Tue Sep 20, 2016 9:04 pm
» Italian firm mulls Tyre manufacturing in Sri Lanka with USD75mn
by kassachandi Tue Sep 20, 2016 8:08 pm
» BINARY OPTION TRADING AND FOREX TRADING
by Tesjay Tue Sep 20, 2016 7:48 pm
» Supporting level?
by EquityChamp Tue Sep 20, 2016 7:39 pm
» SUPER SEPTEMBER LEAVES FEW MORE TRADING DAYS
by EquityChamp Tue Sep 20, 2016 7:31 pm
» JKH.W0023 ????
by ruwan326 Tue Sep 20, 2016 12:07 pm
» Top 10 market Cap companies - YoY status
by EquityChamp Tue Sep 20, 2016 7:24 am
» Megapolis to roll out major project before year-end
by stockback Tue Sep 20, 2016 1:36 am
» GSP + news ahead...buy now at lower counter..
by Brinthan Mon Sep 19, 2016 9:23 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.
- Senior Manager - Equity Analytics
- Posts : 335
Equity Stars : 3459
Reputation : 16
Join date : 2011-01-22
Do you think foreign funds will hold back equity purchases in anticipation of another devaluation?
- Vice President - Equity Analytics
- Posts : 1040
Equity Stars : 4605
Reputation : 272
Join date : 2011-02-09