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Thursday April 18th, 2024

Sri Lanka forex markets inactive, bond yields down

ECONOMYNEXT – Sri Lanka’s forex markets were inactive for the second day with no activity in the spot market and sporadic quotes for the one week dollars in the forward market, after liquidity injections and a rate cut, while bonds edged lower Wednesday dealers said.

The one week forward dollar was offered at around 185.50 rupees but there were no bids, dealers said.

On Tuesday the one week forward rupee was closed at 185.60/00 after opening around 185.30/40 to the US dollar dealers said.

The spot market was also inactive Tuesday. Sri Lanka’s rupee ended weaker at 183.85/184.05 to the US dollar on Friday down from 182.90/183.30 to the US dollar at Thursday’s close.

The central bank cut rates by 25 basis points on Monday in an emergency move following the actions of floating rate central banks, after making 40 billion rupees cash injection on Friday.

On Tuesday excess liquidity topped 140 billion rupees with 80 billion rupee mopped up overnight.

Banks deposited 74 billion rupees in the excess liquidity window Friday after the injection. On Tuesday more cash from a 100 basis point reserve ratio cut, further worsening fears for the country’s currency peg.

In the government securities yield were lower in active trade dealer said, with the prospects of a 500 million dollar loan from China coming on stream. Sri Lanka was originally planning to sell a Samurai bond in the first quarter.

A 12-month Treasury bill was quoted at 8.25/30 percent Wednesday down from 8.30/40 percent on Tuesday, dealers said ahead of a bond auction.

A bond maturing on 15.12.2021 was quoted at 8.55.70 down from 8.85/9.00 percent on Tuesday.

A newly auctioned 2-year bond maturing on 01.10.2022 was quoted at 9.05/10 percent down from 9.20/28 percent.

A bond maturing on 01.09.2023 was quoted at 9.35/45 down from 9.55/65 percent.

A bond maturing on 15.09.2024 was quoted at 9.60/62 down from 9.76/82 percent.

A bond maturing on 15.10.2027 was quoted at 98.85.90 down from 09.85/9.00 percent.

A bond maturing on 15.09.2034 was not quoted. Last Friday the bond was quoted 10.00/40 percent. (Colombo/ Mar18/2020)

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Sri Lanka’s discussions with bondholders constructive: State finance minister

ECONOMYNEXT – Sri Lankan authorities continue to engage all debt restructuring negotiations in good faith, within principles of equitable treatment among creditors, and with maximum transparency within the norms of such negotiations, State Minister of Finance, Shehan Semasinghe has said.

“It is standard practice, when a representative group of bondholders is formed, to entertain confidential discussions with such group and its appointed advisors. In the case of Sri Lanka, the Ad Hoc Group of Bondholders represents holders controlling more than 50% of the bonds, which make them a privileged interlocutor for Sri Lanka,” Semasinghe said on X (twitter).

“It is well understood that given the price sensitive nature of the negotiations, and according to market regulations, discussions with the Group and its advisors are to be conducted under non-disclosure agreements. This evidently restricts the ability of the Government to unilaterally report about the substance of the discussions.

“The cleansing statement, which was issued on the 16th of April, at the conclusion of this first round of confidential discussions with members of the Group, aims at informing the Sri Lankan people, market participants and other stakeholders to this debt restructuring exercise, about the progress in negotiations. It provides the highest possible level of transparency within the internationally accepted practices in such circumstances.

“As informed in this statement, confidential discussions held in recent weeks with bondholders’ representatives proved constructive, building on the restructuring proposals presented by both parties. During the talks both sides successfully bridged a number of technical issues enabling important progress to be made. Sri Lanka articulated key remaining concerns that need to be addressed in a satisfactory manner.

“The next steps would entail further consultation with the IMF staff regarding assessments of the compatibility of the latest proposals with program parameters. Following these consultations, we hope to continue discussions with the bondholders with a view to reaching common ground ahead of the IMF board consideration of the second review of Sri Lanka’s EFF program.”

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Sri Lanka rupee weakens at 301.00/302.05 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 301.00/302.05 to the US dollar in the spot forex market on Tuesday, from 299.00/10 on Tuesday, dealers said. Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent up from 11.95/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent down from 12.10/15 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent.

A bond maturing on 15.03.2031 closed at 12.30/50 percent. (Colombo/Apr17/2024)

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Sri Lanka Treasury Bill yields down across maturities

ECONOMYNEXT – Sri Lanka’s Treasuries yields were down across maturities at Wednesday’s auction with the 3-month yield moving down 7 basis points to 10.03 percent, data from the state debt office showed.

The debt office sold all 30 billion rupees of 3-month bills offered.

The 6-month yield fell 5 basis points to 10.22 percent, with 25 billion rupees of bills offered and 29.98 billion rupees sold.

The 12-month yield dropped 4 basis points to 10.23 percent with 18.01 billion rupees of bills sold after offering 23 billion rupees. (Colombo/Apr17/2024)

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