by nimantha80 Today at 8:05 pm
» HOW WELL ARE YOU KEEPING AWAY FROM THE MARKET
by samaritan Today at 8:04 pm
» How well are you sleeping these days?
by nimantha80 Today at 7:49 pm
» HATS OFF TO QUIBIT
by soileconomy Today at 5:43 pm
» LEASE BG,SBLC
by kimsungnyon007 Today at 4:40 pm
» WE ARE SPECIALIZED IN DELIVERING GENUINE BANK INSTRUMENTS
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» We offer fresh cut bank instruments for lease and sales
by kimsungnyon007 Today at 4:22 pm
» Bridge Loans & Hard Money Financing
by kimsungnyon007 Today at 4:14 pm
» Certified Bank Guarantee BG StandBy Letter of Credit SBLC Available
by kimsungnyon007 Today at 4:10 pm
» Teller, The Great Manipulator Of HEXP
by Miss-Sangeetha Today at 2:35 pm
» DECRIMINALIZATION OF HOMOSEXUALITY
by sureshot Today at 1:45 pm
» MANDATORY OFFER BY PRIME LANDS (PRIVATE) LIMITED TO PURCHASE ALL THE REMAINING ORDINARY SHARES OF SUMMIT FINANCE PLC
by point Today at 12:21 pm
» Be carefully your shares of cse
by rosa maria Today at 12:13 pm
» ජීඑස්පී ප්ලස් සඳහා එකම නිර්ණායකය ජාත්යන්තර ප්රඥප්තීන් 27 ක්රියාත්මක කිරීම පමණයි – යුරෝපා සංගමය කියයි
by worthiness Today at 12:06 pm
» policy direction is required, but no big problem in economy
by worthiness Today at 11:31 am
» SEVERAL STOCK BROKERS TO CLOSE SHOP
by ice4083 Today at 11:15 am
» SEC curbs activities of Swarnamahal Financial Services
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» What is the best free online CSE stocks portfolio monitoring tool/Website?
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» JKH 100/=....NEXT JANUARY.....
by Ryan Hudson Today at 8:41 am
» Minister Kabir Hashim
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» last few years Budgets.
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» ASI Chart 18.01.2017
by stockback Yesterday at 11:51 pm
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» Stock mkt Crash ASI would be reached to 5500
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» කුලියාපිටි ෆොක්ස්වගන් කාර් වලට ටයර් හදන්නෙ හොරණ ද?
by worthiness Yesterday at 9:48 pm
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by worthiness Yesterday at 9:17 pm
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by PrasannaMani Yesterday at 4:05 pm
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» TRAGEDY OF POLICY DECISIONS UNDER YAHAPALANA!
by worthiness Yesterday at 1:44 pm
» Hidden Treasure !!! - Maharaja
by Maharaja Yesterday at 10:45 am
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by PrasannaMani Yesterday at 8:46 am
» CMPort China to pump over US$ 400 mn on H’tota port
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» Finance Minister
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» CSE MARKET SIGNAL
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» INVESTORS AVOID CSE CASINO
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» NO FOOD, EAT FREEDOM OF SPEECH
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» Foreigners who invest over USD 300,000 to get 2 to 5 year visa
by worthiness Mon Jan 16, 2017 7:36 pm
» The dead walk
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» Meka Mahinda Rajapaksege Wadak
by Yahapalanaya Mon Jan 16, 2017 7:00 am
» More buyers than sellers
by nimantha80 Sun Jan 15, 2017 10:48 pm
» HEXP.N000 Chart
by worthiness Sun Jan 15, 2017 10:02 pm
» SHARE YOUR THOUGHTS FOR 2017
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» What are the most Undervalued stock of CSE?
by point Sat Jan 14, 2017 9:06 am
» HEXP cash per share is Rs.48/-
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» REXP REXP.
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» Since today is Poya day...This suits for equity Forum.....
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by PrasannaMani Thu Jan 12, 2017 4:18 pm
» we got GSP relief....Thanks god
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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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