The Central Bank of Sri Lanka strongly objects to the statement released by Fitch Ratings on 21 November 2019 titled “Sri Lanka Election Result Increases Policy Uncertainty”, as it depicts the complete opposite of the realised positive market response to the outcome of the Presidential elections, followed by the assumption of duties by His Excellency the President and ongoing key appointments.
The domestic foreign exchange market, as well as debt and equity markets have responded positively to the outcome of the election. The Sri Lankan rupee has appreciated by more than one rupee against the US dollar during the four days since the conclusion of the elections. During this period, there has also been a sharp decline in the forward premia, reinforcing expectations of a further appreciation of the rupee. In the Government securities market, primary market yields declined sharply at the auction for Treasury bills held on 20 November 2019 while the secondary market yields have also declined notably across the yield curve. Meanwhile, ISB yields have behaved orderly since the start of the business week. Foreign investors have continued to invest notable amounts of funds in the Sri Lankan rupee denominated Government securities. Moreover, the All Share Price Index of the Colombo Stock Exchange has increased significantly over the past few days. Ignoring these positive market trends is a material omission in the statement issued by Fitch Ratings.
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