Sri Lanka Rupee ends firmer, bond yields flat
ECONOMYNEXT- Sri Lanka’s rupee ended firmer at 181.55/60 to the US dollar in the spot market on Thursday while bond yields remained flat, dealers said.
The rupee closed at 181.90/182.00 to the greenback on Wednesday.
Liquidity in the overnight money market was 14.98 billion rupees, down from 22.34 billion rupees at the previous day’s close.
Banks deposited 19.47 billion rupees through the central bank’s excess liquidity window.
In the secondary government securities market, bond yields remained unchanged in dull trade while 2024 maturities remained liquid even though there were low transactions in the market and foreign investors continued to exit, a dealer said.
The government withdrew it’s decision to expand the vote-on-account budget which it is working with for the first months of 2020. The decision came in after the opposition expressed its intentions to not to support the supplementary estimate on vote-on-account.
The government had said that additional spending is required as the former regime did not pay bills to contractors and borrowed above limits.
Former Finance Minister Mangala Samaraweera blamed the new government for cutting taxes giving effect to ill-thought election promise and is now trying to blame the last administration for the lack of fiscal space.
Dealers said the market did not react yet to government’s decision to withdraw a supplementary estimate to a vote-on-account.
A bond maturing on 15.12.2021 closed flat at 9.00/15 percent on Thursday from Wednesday’s close.
A bond maturing on 01.09.2023 closed at 9.45/60 percent, gaining from 9.35/50 percent at the previous close.
A bond maturing on 15.09.2024 closed at 9.78/85 percent, climbing from 9.70/80 percent at the previous day’s end.
A bond maturing on 15.10.2027 closed at 9.90/10.05 percent, gaining from 9.85/95 percent.
A bond maturing on 15.05.2030 closed at 9.90/20 percent, easing from 9.95/15 percent from its last close.
A bond maturing on 15.09.2034 closed at 9.90/25 percent, down from 9.95/25 percent at Wednesday’s close.
Kithmina Hewage- Institute of Policy Studies