Sri Lanka rupee ends firmer, bond yields fall
Apr 11, 2019 17:05 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT- Sri Lanka's rupee closed firmer at 174.60/75 to the US dollar in the spot market Thursday amid a credit slowdown, while bond yields fell on buying pressure, market participants said.
The rupee closed at 174.65/75 to the US dollar in the spot market on Wednesday, and had opened on Thursday stronger, at 174.55/60.
Dealers said the bond market was active throughout the day, with buying pressure after yields fell at a bill auction yesterday.
At the primary bill auction on Wednesday, weighted average yields on 12-month bills fell 16 basis points from a week earlier, continuing a downward trend for the seventh consecutive week.
The public debt office raised 25 billion rupees in 3-month, 6-month, and 12-month maturities.
The government's decision to repay overdues to construction firms and banks has generated buying interest for bonds as well, dealers said.
Private credit has slowed down amid an inactive construction sector, which was awaiting the repayments, and banking sector bad loans may start to go down with the government's move, analysts say.
The Central Bank is also expecting liquidity injections of around 25-30 billion rupeess into money markets as credit margins held for vehicle imports get released.
However, liquidity is in higher demand during April, as people draw out money for spending on festivities in the holiday season.
Banks were seen withdrawing more from the window than depositing.
In the overnight money market, a liquidity short widened to 16.09 billion rupees from 7.55 billion rupees a day earlier.
The Central Bank had injected 5 billion rupees in overnight money at 8.54 percent, while 9.7 billion rupees was injected in 5-day and 14-day money at 8.54-55 percent..
In the secondary bond market, twelve-month bills closed at 9.80/95 percent on Thursday, down from 10.00/15 percent at Wednesday's close.
A newly issued bond maturing on 15.03.2022 closed at 10.40/47 percent, down from 10.55/60 percent.
A bond maturing on 15.07.2023 ended at 10.65/70 percent, down from 10.80/85 percent.
A 5-year bond maturing on 15.03.2024 closed at 10.75/78 percent, down from 10.90/95 percent.
A bond maturing on 01.06.2026 ended at 10.97/00 percent, down from 11.00/10 percent.
New bond maturing on 15.01.2027 closed at 10.98/02 percent, down from 11.10/17 percent.
A bond maturing on 01.05.2029 closed at 11.17/22 percent, down from 11.27/33 percent. (Colombo/Apr11/2019-SB)