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1. I'm willing to risk at least 50%, while looking for at least 5X return on overall portfolio.
2. Buy at support, or a massive sell-off. Focus accumulation of uranium miners employing ISR techniques, gold miners with unique properties, royalty gold stocks, and firms with top management.
3. If any position doubles in value, sell half.
4. Hold the rest till top of market. For uranium miners, this is at least a price per pound of $140 in the uranium market; for gold, it depends: need to see a new international monetary agreement and some type of resolution to the global sovereign debt crisis.
5. Exit uranium if China and India back off nuclear.
6. Possibly exit on change of management.
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» Brazil holds rate, but 2 Copom members want 50 bps hike
Nov 25, 2015 - by InformedTrades
Brazil's central bank left its benchmark Selic rate steady at 14.25 percent but two members of the eight-member policy committee Copom voted to raise the rate by 50 basis points, a sign the rate may be raised at the next meeting in January 2016.
The Central Bank of Brazil, which halted its tightening campaign in July after raising the rate by 700 basis points since April 2013, said Copom members Sidnei Correa Marques and Tony Volpon had voted to raise the rate to 14.75 percent while the other six members, including Chairman Alexandre Tombini, voted to retain the rate.
In a brief statement, the central bank said Copom had decided to maintain the rate in light of the "macroeconomic scenario and the outlook for inflation," omitting last month's reference to maintaining the rate for "a sufficiently long period" to reach its inflation goal.
However, in its October statement, the central bank said that it would be "vigilant" in achieving its inflation goal.
Since halting its tightening campaign in July, Brazil's inflation rate has continued to accelerate, hitting 10.28 percent in mid-November - a 12-year high - from 9.93 in October and 9.56 percent in July.
The central bank's Nov. 16 survey of economists showed that they expect inflation to end this year at 10.04 percent before easing to 6.5 percent next year, up from the previous survey of 9.99 percent inflation for this year and 6.47 percent for 2016.
But while inflation has risen, Brazil's economy is in recession with Gross Domestic Product in the second quarter contracting by 1.9 percent following a 0.7 percent fall in the first quarter. On an annual basis, GDP shrank by 2.6 percent, the fifth quarter in a row of declining output.
The central bank targets inflation at a midpoint of 4.50 percent, within a 2.50 percent to 6.50 percent range, and has pledged to reach its inflation goal by late 2016.
Brazil's real has been depreciating since September 2014 but has firmed since late September. Today the real was trading at 3.74 to the U.S. dollar, down 28.9 percent this year.

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» Sitting Ducks in China's Bathtub, an Overture to World War III? (Doug Casey)
Nov 25, 2015 - by InformedTrades
Originally Published by Casey Research
It’s always been true, as Bourne said, that “war is the health of the State.” But it’s especially true when economic times get tough. That’s because governments like to blame their problems on outsiders; even an imagined foreign threat tends to unify opinions around those of the leaders. Since economies around the world are all weakening, and political leaders are all similar in essential mindset, there’s good reason to believe the trend towards World War III is accelerating.

Many politicians and pundits in the U.S. blame “those damn Chinese” for taking “our jobs” by filling Walmart with tons of cheap goods, and the swarthy ragheads for making the price of oil too high (usually, but now too low).

The Russians, the Iranians, the Taliban (who will soon reconquer Afghanistan) and ISIS (which is carving out a new nation-state from the ruins of Syria and Iraq) are permanent members on the list of Bad Boys.

But now, since the Obama regime has decided to “pivot to the East,” you can underline China’s name on that list.

The “pivot” being the U.S. government’s new focus on meddling in Asia, as opposed to meddling in the Middle East and Europe. U.S. Defense Secretary Ash Carter says the U.S. will be the principal security power in the Pacific “for decades to come.” I’m sure the locals, including the Chinese, were thrilled to hear that.

It’s said that the U.S. government has combat troops (or advisors, as highly trained special ops guys are usually euphemistically termed) in about 100 countries. It’s hard to keep track of their latest “intervention”…although “interference” is a better word. Note that I said “they,” not “us,” in reference to Washington. The city has a life of its own and its interests are not necessarily those of the country it rules.

Let’s see…sending arms to a puppet government in Kiev to help put down a secession in Donetsk and Lugansk. Sending jets, and now ground troops, to Syria, which will quite possibly create an incident with the Russians. 150 soldiers to Uganda to fight the Lord’s Resistance Army and 300 to Cameroon to fight Boko Haram. And more troops to Iraq and Afghanistan to help out our “allies.” For the moment, they’re the best allies money can buy.

It’s hard to keep track of them all, with something new almost every week. But, on the bright side, war is nature’s way of teaching Americans geography.

So, with that in mind, we now have to learn where the Spratly Islands are. Let’s start with a map.

Map of the South China Sea Region (Photo: John Bretschneider)

You’ll note the red line. In 2012 China decided that the entire area, right up to the shorelines of Vietnam, Taiwan, the Philippines, Malaysia, and Brunei, was part of its economic zone. The governments of all those countries also have claims to parts of the South China Sea, and the Spratlys in particular. You’ll also note the Paracels, another zone of contention, between China and Vietnam.

Believe it or not, from 1956 to 1972 (when he was jailed for his efforts) a Filipino businessman, one Tomás Cloma, also attempted to claim part of the Spratlys, and make it an independent country, Freedomland. This caught my attention, in that I was (very marginally) involved in three other island independence movements in the ‘70s: Nagriamel, Abaco, and Minerva. Those, however, are stories (all a mixture of tragedy, comedy, and pathos) for another day.

Until very recent times, the Spratlys were best known as a hazard to navigation, with about 750 islets, reefs, and sandbars, total land area about 1.5 square miles, spread over about 160,000 square miles of the South China Sea.

I’ve never been to the Spratlys. But their potential value is clear. It’s said up to 30% of the world’s fish catch comes from the South China Sea. And, almost needless to say, it’s conjectured that the area contains a lot of oil.

So, you’re probably asking yourself, “What is that to me?” The answer should logically be “Nothing, really, unless it’s a question on a quiz show.”

But the U.S. government, although it, as usual, has no dog in the fight, has decided to get involved. The catalyst for it acting now is that China is in the process of transforming at least seven reefs into usably large artificial islands, several with long airstrips.

I’ve looked at the history of who has used, and claimed ownership, of the islands over the centuries. All the adjacent countries have somewhat reasonable-sounding claims. And the Taiwanese, Filipinos, Malaysians and Vietnamese each have a military presence on one or more of the Spratlys. But only the recent Chinese efforts have drawn the U.S. government’s attention. Recently, they sent a guided missile destroyer, the USS Lassen, within the 12-mile limit of Subi Reef, which the Chinese are currently expanding. Reports are conflicting whether the ship was just innocently passing through, or trying to create a precedent.

I’d like to ask, how do you, I mean you personally, feel about that? I’d like to know. Scores of millions of Asian locals, who’d previously never even heard of the islands, and certainly can’t find them on a map, are getting worked up because their governments told them the islands were “theirs.” And now the U.S. is further complicating the matter. But here’s my take.

The Chinese seem quite out of line claiming the whole South China Sea as their economic zone. Shame on them. But how is that the problem of the U.S.? It’s the problem of the locals. Should the Chinese be able to build artificial islands? That’s a somewhat different question. I’d say, why not? Disputed or unclaimed land belongs to the person who uses it.

One thing is for sure: the U.S. government is asking for trouble flying military aircraft off the coast of China and sailing warships into waters they claim. How would the U.S. react if Chinese planes and warships were often seen off the West coast? Or if the Santa Catalina or San Juan islands developed independence movements that the Chinese backed?

The U.S. government feels pretty bold about its intrusion into the South China Sea, since no other government has a naval force even remotely comparable to its 12 aircraft carrier groups. But that boldness is foolish and unjustified. I’ve said for many years that those carriers are exactly analogous to battleships before World War II, or cavalry before World War I. They’re essentially sitting ducks, highly vulnerable to all manner of cheap, accurate missiles, both cruise and ballistic, that could swarm them en masse.

It will be a huge embarrassment to Americans (but a treat to divers a couple generations hence) when they’re sunk, and sprouting barnacles like the Japanese fleet in Truk Lagoon.

The U.S. knows that it’s China’s backyard, and they could sink any U.S. taskforce if they choose to. But they probably won’t. Why start a war when your enemy has a superior military, but you are growing your economy several times faster than he is? It makes more sense to wait…so it’s likely to remain a Mexican standoff, as opposed to an overture to World War III. But these things have a way of escalating unpredictably. In any event, it makes no sense to go to the other side of the globe just to provoke someone.

In the meantime, the U.S. carrier groups are prestigious, and great for sticking the U.S. government’s nose into far-off places where it’s not welcome. But they’re hugely expensive, at about $6 billion a ship, plus another billion or two per copy for its half-dozen escorts, plus another $200 million for each of the 50 or so F-35 fighters they’ll soon carry. Plus a few billion a year to keep each group operational. Not to worry on that score; the Chinese will surely lend the U.S. government more money to enable that.

There’s plenty of reason to be concerned about the roughly $1 trillion a year the U.S. spends on the military and “security.” Even though it’s more than the next 28 countries combined, it’s apparently not enough to keep America safe. In fact, it’s actually making the country less safe, by provoking and threatening other powers.

And if it doesn’t start a war in the short run, it’s going to guarantee a U.S. bankruptcy in the slightly longer run. All the “hawks” running for president this year (which is to say, almost every candidate) seem oblivious to the fact that, in anything but the briefest conflict, economic power completely trumps military hardware.

In conclusion, whenever you see a mention of the U.S. Navy and the Spratlys in the same paragraph, you’re seeing a reminder of an open vein helping to bleed America dry. And that’s the best case.

Editor’s Note: Unfortunately, there’s little any individual can do to practically change the trajectory of this trend in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation.

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» Nigeria cuts rate 200 bps, CRR 500 bps to boost growth
Nov 24, 2015 - by InformedTrades
Nigeria's central bank cut its Monetary Policy Rate (MPR) by 200 basis points to 11.0 percent and the Cash Reserve Requirement (CRR) by 500 basis points to 20.0 percent in light of "the weakening fundamentals of the economy, particularly the low output growth, rising unemployment and the uncertainty of the global economic environment."
It is the first rate cut by the Central Bank of Nigeria (CBN) this year and 8 of 10 members of the monetary policy committee voted for the rate cut while two voted to keep it steady. Seven members voted to cut the CRR while three voted to retain it.
Eight MPC members also voted to change the interest rate corridor to an assymetric plus 2 percent/minus 7 percent while 2 members wanted to retain the symmetric corridor of plus/minus 2 percentage points around the policy rate.
Concerned about a rise in Nigeria's unemployment rate to 8.2 percent in the second quarter from 7.5 percent in the first quarter, the central bank evaluated various options for funneling credit to growth sectors and emphasized that the liquidity released by a reduction in the reserve requirement "will only be released to the banks that are willing to channel it to employment generating activities in the economy, such as agriculture, infrastructure development, solid minerals and industry."
A drop in Nigeria's inflation rate in October to 9.3 percent from 9.4 percent in September "provided some room for monetary easing to support output in the short to medium term," CBN said.
However, the central bank added that it would continue to monitor developments around the naira's exchange rate, interest rates and consumer prices, underscoring that close coordination between monetary and fiscal policy was imperative to improve growth in a sustainable manner.
The naira tumbled from November last year to March when the central bank imposed foreign currency controls on Africa's leading crude oil producer to preserve foreign reserves.
Since early March, the central bank has adjusted its exchange rate peg several times with the naira quoted at 199 to the U.S. dollar today compared with 182.5 at the end of 2014 for a depreciation this year of 8.3 percent.
Nigeria's official reserves rose to US$30.31 billion as of Nov. 20 from $29.85 billion end-September, the central bank said.

The Central Bank of Nigeria issued the following statement:
"The Monetary Policy Committee met on 23rd and 24th November, 2015 against the backdrop of slowing global growth and a weakening domestic economic environment, attributable largely to the down turn in oil prices. In attendance were 10 out of 12 members. The Committee appraised the global and domestic economic and financial environments up to October 2015 as well as the economic outlook for the first half of 2016.

International Economic Developments
The Committee noted the moderation in global output recovery evidenced by the less-than-expected growth of 2.9 per cent in the first half of 2015. The development was underpinned largely by deteriorating global trade, reversal in output growth in the advanced economies and a significant slowdown in growth in the emerging and developing economies. The key drag on growth in the advanced economies included unfavorable labor market conditions, suppressed foreign demand and weaker than anticipated domestic aggregate demand. Consequently, growth in the U.S. slowed to 1.5 per cent in the third quarter of 2015 as a result of a drawdown in inventories; deceleration in exports; drag in private consumption, government spending and residential fixed investment. The outlook for the fourth quarter, however, remains optimistic as consumption spending is expected to drive growth, supported by low inflation.

The Bank of Japan continued with monetary easing, through its asset purchase program, with a monthly injection of ¥6.7 trillion ($54.27 billion); but this was insufficient to restart output as third quarter growth is projected to be weaker than the second quarter, thereby increasing the likelihood of dampening growth and pressure for higher stimulus. The European Central Bank (ECB) in October 2015; reaffirmed its commitment to its monthly asset purchase of €60 billion ($64.2 billion) until September, 2016; although the package may fall short of what is required for meaningful impact on growth. Similarly, the Bank of England continued its ?375 billion ($570 billion) monthly asset purchase program, as the economy is expected to retreat from its performance of 0.7 per cent in the second quarter to about 0.5 per cent in Q3 with the decline in foreign demand, potentially dampening the prospects for an interest rate hike.

Growth in the emerging markets and developing economies (EMDEs) continued to sag; reflecting the protracted slowdown in China as well as recession in Russia and Brazil. The slowdown among EMDEs has been mainly due to weak import growth in China, low commodity prices, capital flow reversals, rising debt levels and other geopolitical factors. In effect, the poor growth expectations could continue into the fourth quarter with the likelihood of further dampening into 2016.

Overall, monetary policy in the most advanced and emerging market economies appears oriented towards easing to revive output and strengthen employment. No substantial upswing is expected around the current tepid global inflation, projected to remain moderate through 2016. The continuously bearish commodity prices and stronger consumer sentiments have dampened

consumer prices in the advanced economies. In the emerging and developing markets, the major risk to domestic prices is mainly the increased pressure on domestic currencies. However, in most emerging markets, the low prices of oil and other commodities continue to cushion consumer inflation pressures.

Domestic Economic and Financial Developments

Data from the National Bureau of Statistics (NBS) indicated that real GDP grew by 2.84 per cent in the third quarter of 2015, compared with 2.35 per cent in the second quarter. However, economic growth in Q3 was lower than the 3.96 and 6.23 per cent in the first quarter of 2015 and the corresponding period of 2014, respectively. Both the oil and non-oil sectors contributed to growth in the third quarter of 2015. In the non-oil sector, the key drivers of output growth were Crop Production, Trade and Telecommunications and Information Services, contributing 0.91, 0.79 and 0.40 percentage points, respectively.
The overall outlook for economic activity is expected to improve on account of sustained improvement in the supply of power and refined petroleum products, progress with counter-insurgency in the North-East and targeted interventions in the real sector. In addition, the inauguration of the Federal Executive Council and the assumption of office of the Ministers, earlier this month, are expected to add impetus to the growth momentum. The Committee reiterated its commitment to support the various ongoing initiatives of the Federal Government to stimulate output growth.


The Committee noted with delight the slight decline in year-on-year headline inflation to 9.3 per cent in October, from 9.4 per cent in September, 2015. The decline in headline inflation in October 2015, reflected decreases in both the core and food components. Core inflation declined for the second consecutive month to 8.7 per cent in October from 8.9 per cent in September, while food inflation slowed to 10.1 per cent from 10.2 per cent over the same period. The Committee further noted the continued moderation in month-on-month inflation and reaffirmed its commitment to price stability, stressing the need for complementary supply side policies as part of an overall strategy to lock-in inflation expectations.

Monetary, Credit and Financial Markets Developments
Broad money supply (M2) contracted by 3.75 per cent in October, 2015, over the level at end-December, 2014. Annualized, M2 declined by 5.0 per cent, which is significantly below the growth benchmark of 15.24 per cent for 2015. Net domestic credit (NDC) grew by 10.8 per cent, which annualizes to 14.35 per cent in the same period. At this level, NDC fell below the provisional benchmark of 29.30 per cent for 2015. Growth in aggregate credit reflected mainly growth in net credit to the Federal Government which grew by 96.66 per cent in October, although lower than the 142.38 per cent in September, 2015. The sharp moderation in credit to government may be partly attributable to the lag effect of implementation of the Treasury Single Account (TSA).
During the period under review, money market interest

rates were low but sometimes volatile, reflectingfluctuations in banking system liquidity during the period. Average inter-bank call and Open Buy Back (OBB) rates, which stood at 15.50 and 35.00 per cent on September 21 and 22, 2015, respectively, fell to 9.67 and 9.00 per cent on September 23, 2015. On October 19, 2015, OBB rate closed at 1.00 per cent with no transaction at the interbank call segment. Following the increase in net liquidity level, the interbank call and OBB rates further declined and closed at 3.76 and 0.73 per cent, on October 29 and 30, 2015, respectively. Between the last MPC and end-October 2015, interbank call and OBB rates averaged 6.66 and 6.72 per cent, respectively, and were 0.41 per cent and 1.33 per cent on 19th November, 2015.
The Committee also noted the bearish trend in the equities segment of the capital market during the review period. The All-Share Index (ASI) decreased by 9.9 percent from 31,217.77 on September 30, 2015 to 28,131.28 on November 20, 2015. Similarly, Market Capitalization (MC) fell by 9.9 per cent from N10.73 trillion to N9.67 trillion during the same period. However, relative to end- December 2014, the indices decreased by 18.9 and 9.5 per cent, respectively. These developments reflected, largely the cautious approach to lending by the deposit money banks.

External Sector Developments

The average naira exchange rate remained relatively stable at both the inter-bank and Bureau-de-Change (BDC) segments of the foreign exchange market during the review period. The exchange rate at the interbank market opened at N197.00/US$ and closed at N197.00, with a daily average of N196.99/US$ between September 21 and October 30, 2015. At the BDC segment, the exchange rate opened at N223.50/US$ and closed at N225.00, with a daily average of N224.46/US$, representing a depreciation of N1.50k for the period. The relative stability in the foreign exchange market is attributable to the sustained supply of foreign exchange from autonomous sources as well as the effects of various administrative measures taken by the Bank. Gross official reserves increased from US$29.85 billion at end-September, 2015 to $30.31 billion on 20th November, 2015.

Committee’s Considerations

The Committee acknowledged the continued fragile global economic environment, including the possibility of monetary policy normalization in the United States; poor outlook for commodity prices and further slowdown in the Emerging Markets and Developing Economies. The MPC also noted the fragility of the domestic macroeconomic environment; reflected partly in low output growth, soft oil prices, low credit to the high elasticity sectors of the economy and sustained inflationary pressure, which however, softened moderately in October. The MPC was, particularly, concerned that the previous liquidity injections embarked upon through lowering of the Cash Reserve Ratio (CRR), in the last MPC, has not transmitted significantly to improved credit delivery to key growth and employment in sensitive sectors of the economy. Rather, credit went to sectors with low employment elasticity.

The Committee restated its commitment to evolve and implement measures that would be supportive of consolidating and strengthening output growth, however, with an eye on price stability. The Committee, however, recognized the limits of monetary policy under conditions of huge infrastructure gap and significant global financial market fragilities. While noting the imperative of complementary fiscal policies to augment monetary policy, under the circumstance, monetary policy must remain bold in charting the desired course that would stimulate sustainable output growth in the country.

Concerned about the state of unemployment in the country, the MPC evaluated various options for ensuring increased credit delivery to the key growth sectors of the economy, capable of generating employment opportunities, and improving productivity. The Committee underscored the need for the Deposit Money Banks to ensure that measures taken by the Central Bank to inject liquidity and stimulate the economy adequately translate into increased lending to the sectors with sufficient employment capabilities and the potential to generate growth. Accordingly, the MPC agreed that going forward any attempt by the CBN at easing liquidity into the system shall be directed at targeting real sector, infrastructure, agriculture and solid minerals. The MPC further directed the Bank’s Management to put in place necessary measures/regulations to ensure strict compliance by the DMBs. This is aimed at ensuring that employment and productivity is stimulated while also moderating prices.

The Committee noted with satisfaction the stability, soundness and resilience of the banking system even against adverse global financial conditions. Given the situation, the MPC emphasized the necessity of focusing on financial market stability and proactive engagement of policy and administrative levers needed to support the environment in which market institutions operate. On their part, market institutions are encouraged to employ more stringent criteria in evaluating their portfolio and business decisions.

The MPC considered that although, headline inflation had remained at the borderline of single digit, the observed moderation, especially in the month-on-month inflation, provided some room for monetary easing to support output in the short to medium term, while keeping in focus the primacy of price stability. In effect, the Committee will continue to monitor developments around the Naira exchange rate, interest rates, and consumer prices, even as target measures are needed to channel liquidity to the key sectors of the economy in an attempt to drive growth.

The Committee noted that close coordination between monetary and fiscal policy was imperative for sustainable growth enhancing policies.

The Committee’s Decisions
In consideration of the weakening fundamentals of the economy, particularly the low output growth, rising unemployment and the uncertainty of the global economic environment, the MPC, by a vote of 8 out of 10, reduced the MPR from 13.0 to 11.0 per cent while 2 members voted for a retention of the rate at 13.0 per cent; 7 members voted to reduce the Cash Reserve Requirement (CRR) from 25.0 per cent to 20.0 per cent while 3 members voted to hold. In addition, 8 members voted for an asymmetric corridor of +2/-7 per cent while 2 voted to retain the symmetric corridor of +/-2 per cent around the Monetary Policy Rate (MPR).

The MPC emphasized that the liquidity arising from the reduction in the CRR to 20 per cent, will only be releasedto the banks that are willing to channel it to employment generating activities in the economy such as agriculture, infrastructure development, solid minerals and industry.

In summary, the MPC voted to:
(i) Reduce the CRR from 25.0 per cent to 20.0 per cent;

(ii) Reduce the MPR from 13.0 per cent to 11.0 per cent;
(iii) Change the symmetric corridor of 200 basis points around the MPR to an asymmetric corridor of +200 basis points and -700 basis points, around the MPR."

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» [text] Shorting the Yuan May be the Next Hot Hedge Fund Trade That Generates Positive Returns | ValueWalk
Nov 24, 2015 - by InformedTrades

"Back in early 2013, we started to*notice a prominent trend – hedge funds in both public and private communications started to talk more and more about short yen and less and less about being long Apple. What we noted*anecdotally*turned out to be around the point when short yen became one of the most popular hedge fund trades, while long Apple became less popular. Today, we are noticing the same trend with short the Yuan or RMB, which makes us ask is this now or going to become the next hot hedge fund position? For one extreme example, we reported how Forum Global is up 107% YTD (as of September 1st)*including a 60% return in August on a massive RMB bet gone right."
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» Sri Lanka holds rates, notes rising core inflation, credit
Nov 24, 2015 - by InformedTrades
Sri Lanka's central bank maintained its key interest rates, as expected, noting the continued increase in core inflation due to firmer demand and a further rise in credit to the private sector.
The Central Bank of Sri Lanka, which cut rates by 50 basis points in April, also estimated that gross official reserves rose to around US$8.0 billion as of Nov. 3 from $6.8 billion at the end of September, boosted by the inflow of funds from the ninth sovereign bond of $1.5 billion.
Meanwhile, the central bank noted that the Sri Lankan rupee had depreciated by 8.1 percent against the U.S. dollar so far in 2015. The rupee was trading at 142.6 to the dollar today, down 8.06 percent since 131.1 at the end of 2014.
Sri Lanka's headline inflation rate rose to 1.7 percent in October from minus 0.3 percent in September. Negative inflation from July through September reflected the impact of the downward revision of administered prices in the latter part of 2014.
Core inflation, however, rose further to a 2015-high of 4.4 percent in October, "reflecting the firming up of aggregate demand conditions in the economy," the central bank said.
Earlier today the central bank governor, Arjun Mahendran, was quoted as saying there was no need to raise rates at the moment while India is reducing rates and the high growth in credit did not warrant higher rates.
The central bank maintained its Standing Deposit Facility Rate (SDFR) at 6.0 percent and the Standing Lending Facility Rate (SLFR) at 7.50 percent.

The Central Bank of Sri Lanka issued the following statement:

"Headline inflation, as measured by the Colombo Consumers’ Price Index (CCPI, 2006/2007=100), increased to 1.7 per cent on a year-on-year basis in October 2015 from negative 0.3 per cent in September 2015 mainly reflecting the dissipation of the impact of the downward revision of administered prices during the latter part of 2014. On an annual average basis, headline inflation remained unchanged at 0.7 per cent in October 2015. However, reflecting the firming up of aggregate demand conditions in the economy, core inflation continued to increase during last eight months reaching 4.4 per cent in October 2015, on a year-on-year basis, compared to 3.2 per cent recorded at end 2014. In the meantime, the Department of Census and Statistic (DCS) released a National Consumer Price Index (NCPI, 2013=100) on 23 November 2015 covering price movements in all provinces in the country. The movements of the NCPI are broadly in line with the movements in CCPI, which only covers the urban areas of the Colombo district. Headline inflation as per the year-on-year change in NCPI was at 3.0 per cent for October 2015.

In the monetary sector, the year-on-year growth of credit granted to the private sector by commercial banks increased further to 22.2 per cent in September 2015 from 21.3 per cent in the previous month. As per the Quarterly Survey of Commercial Banks’ Loans and Advances to the Private Sector, the Services and Industry sectors witnessed the highest intake of credit, recording year on year increases of 40.6 per cent and 24.5 per cent, respectively. Broad money (M2b) grew by 16.0 per cent (y-o-y) in September 2015 compared to 16.8 per cent in the previous month driven by the expansion of credit extended to both private and public sectors by the banking system.

With regard to the external sector, the decline in expenditure on imports in September 2015 was greater than the decline in earnings from exports, narrowing the deficit in the trade account by 4.1 per cent to US dollars 733 million. However, on a cumulative basis, trade deficit widened during the first nine months of the year by 3.8 per cent to US dollars 6,145 million, driven by the continued increase in non-oil imports. Recent policy measures taken by the Central Bank and the government coupled with policy measures announced in the Budget for 2016 are expected to curtail certain imports, particularly motor vehicles, thereby easing the pressure on the external sector. Meanwhile, earnings from tourism in the first ten months of 2015 are estimated to have grown by 17.9 per cent, strengthening the external current account, while workers’ remittances recorded a moderate growth of 1.8 per cent in the first nine months of the year. Gross official reserves, which stood at US dollars 6.8 billion at end September 2015, are estimated to have strengthened to around US dollars 8.0 billion by 03 November 2015 with the receipts from the ninth International Sovereign Bond issuance for US dollars 1.5 billion. Meanwhile, the Sri Lanka rupee has depreciated by 8.1 per cent against the US dollar so far in 2015.

Taking the above developments in the economy into consideration, the Monetary Board, at its meeting held on 24 November 2015, was of the view that the current monetary policy stance of the Central Bank is appropriate. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 per cent and 7.50 per cent, respectively."

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