Sri Lanka continued to conduct monetary policy in a forward looking manner within an enhanced monetary policy framework aimed at stabilising inflation in mid-single digit levels, while progressing rapidly towards transitioning to full fledged Flexible Inflation Targeting (FIT).
The Central Bank says that the weekly Average Weighted Prime Lending Rate (AWPR) for the week ending 31st January 2020 increased by 06 bps to 9.68 per cent compared to the previous week.
The weekly AWPR is the weighted average rate of interest rates applicable on short term loans and advances granted by commercial banks to their prime customers during a particular week.
“Enhancing Efficiency of the Transmission of Recent Policy Decisions to Rupee Denominated Market Lending Rates” required, inter alia, every licensed commercial bank (LCB) to reduce their weekly Average Weighted Prime Lending Rate “(AWPR), CB announced earlier.
According to CB statistics, the reserve money decreased compared to the previous week mainly due to the decrease in currency in circulation and deposits held by the commercial banks with the Central Bank.
The total outstanding market liquidity was a surplus of Rs. 5.851 billion by end of the week, compared to a surplus of Rs. 13.325 billion by the end of last week.
Broad money (M2b) expanded by 7.0 per cent, on a year-on-year basis, in December 2019.
Net Credit to the Government from the banking system has increased by Rs.65.0 billion in December 2019. Credit to public corporations increased by of Rs. 15.1 billion in December 2019.
Credit extended to the private sector increased by Rs.57.9 billion in December 2019. During the year up to 31st January 2020 the Sri Lanka rupee appreciated against the US dollar (0.03 per cent).
Given the cross currency exchange rate movements, the Sri Lanka rupee appreciated against the euro (1.7 per cent), the pound sterling (0.2 per cent), the Japanese yen (0.4 per cent) and the Indian rupee (0.6 per cent) during this period. The gross official reserves were estimated at US dollars 7,642.4 million as at 31st December 2019.
(LI)