Sri Lanka rupee ends firmer, bond yields fall

ECONOMYNEXT- Sri Lanka’s rupee closed stronger at 176.00/10 to the US dollar in the spot market on Thursday, while bond yields continued to fall, dealers said.

The rupee rebounded after being quoted as low as 176.30/40 to the US dollar mid-morning on Thursday, dealers said.
The currency closed at 176.20/30 to the greenback on Wednesday, gaining from Tuesday, after falling for three days. 
Liquidity in overnight markets was 20.32 billion rupees, falling from 25.05 billion rupees . 
The central bank mopped up 5 billion rupees through overnight repo auctions at 8.50 percent.
Another 22.1 billion rupees was mopped up through 5, 6 and 10-day term repos at 8.55 percent, 8.56 percent and 8.59 percent respectively amid maturing of past term repo transactions.
Another 3 billion rupees in liquidity was also drained through the bank window.
The central bank continued to maintain its holdings of government securities.
Bond yields were seen easing in active trading, as sentiment from the Wednesday’s primary bills auction, where yields fell 26 basis points, carried forward, dealers said.
Dealers said buying in bonds continued due to positive liquidity in money markets.
Banks were buying bonds due to warier lending amid rising loan losses and falling private credit demand.
Foreign buying centred on 2024 and 2028 bonds, while interest was also seen in 2022 and 2023 maturities, dealers said.
A bond maturing on 15.12.2021 closed at 9.75/85 percent on Thursday, down from 9.80/90 percent at Wednesday’s close.
A bond maturing on 15.03.2023 closed at 10.30/35 percent, easing from 10.33/40 percent.
A bond maturing on 15.03.2024 closed at 10.38/42 percent, easing from 10.40/47 percent.
A 7-year bond maturing on 01.08.2026 closed at 10.62/67 percent on Thursday, falling from 10.67/73 percent at Wednesday’s close.
A bond maturing on 15.01.2027 closed at 10.68/72 percent, falling from 10.72/78 percent.
A 10-year bond maturing in 01.05.2029 closed at 10.80/85 percent, down from 10.83/90 percent. (Colombo/May16/2019)

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