ECONOMYNEXT – Sri Lanka’s bond yields in the secondary market up slightly while the rupee remains inactive in the forex market on Monday, market participants said.
The island has raised a de facto 12-month policy rate which is below the overnight rate, through which large volumes of debt have been monetized by 05 basis points to 5.33 percent, according to a central bank notice.
Sri Lanka’s overnight policy rate is 5.50 percent but hundreds of billions of rupees of government debt had been monetized and legacy debt has been turned into reserve money exchangeable for dollars at various ceiling rates for bond auctions.
In Sri Lanka’s forex market, interbanks are not allowed to deal above 200 to the US dollar and import customers are not allowed to be given dollars above 203 to the US dollar in curbs announced after money printing triggered forex shortages.
The central bank’s indicative spot rate was 199.9075 on August 09.
The buying rate for telegraphic transfers was 197.8023 and the selling rate was at 202.8977 Monday up from 198.3183/202.8977 on Friday.
In bond markets, short tenor gilt yields edged up while the long tenors were iliquid.
A 2-year bond maturing on 15.12.2022 closed at 5.65/72 per cent on Monday, up from 5.60/70 per cent on Friday.
A bond maturing on 15.11.2023 closed flat at 6.27/30 per cent on Monday from Friday.
A bond maturing on 1.12.2024 closed at 6.88/93 per cent on Monday, up from 6.85/90 per cent on Friday.
A bond maturing on 01.02.2026 closed at 7.40/50 per cent on Monday, up from 7.35/50 per cent on Friday.
A bond maturing on 15.08.2027 closed indicative at 7.55/85 per cent on Monday, down from 7.60/90 per cent on Friday.