Central Bank raises US$ 50 mn in bonds, and opts for moralsuation to prop the rupee

The Central Bank has raised US$ 50 mn on behalf of the government by way of a two-year Sri Lanka Development bond priced at 179.51 basis points above six months LIBOR. The Central Bank has raised US$ 50 mn on behalf of the government by way of a two-year Sri Lanka Development bond priced at 179.51 basis points above six months LIBOR. The issue, the second in the US$ 200 mn series, was heavily oversubscribed with US$ 123.9 mn worth of bids, the Dr. W M Hemachandra Acting Superintendent of Public Debt said.

The bank said last month that it may float a planned US$ 200 mn bond issue later this year or early next year - depending on market conditions.
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The funds are mainly channeled towards bridging the budget deficit.

Meanwhile, the government says it has not decided whether to impose exchange control limits, to force exporters to bring back their dollar proceeds.

"Nothing is confirmed, though our alliance partner the JVP met the Finance Minister on Wednesday and suggested some form of exchange control to bring the rupee down," Media Minister Mangala Samaraweera told journalists on Thursday.

Earlier, Central Bank officials had told dealers that they are willing to buy US dollars at Rs. 104.00. The moralsuation tactic brought the rupee down from 103.90 to close at 103.55 against the US dollar today.

-LBO Newsdesk: LBOEmail@vanguardlanka.com