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Sri Lanka rupee ends firmer, gilt yields steady

ECONOMYNEXT – Sri Lanka rupee was closed stronger at 184.95/185.05 against the US dollar on Wednesday while bond yields steady, dealers said.

The rupee closed at 185.35/40 to the greenback on Tuesday.

In the secondary government securities markets, bond yields fell marginally, dealers said.

The secondary market remained dull over the past few weeks with market participants adopting a wait and watch stance.

Sri Lanka’s debt office offered 40 billion rupees in a weekly bills auction held today. The auction was undersubscribed, only selling 19 billion rupees.

The 9 billion rupees bills maturing in 3-months sold only 4 billion rupees.

9.25 billion rupees of bills maturing in 6-months were sold after offering 15 billion rupees at 4.64 per cent.

The debt office offered 16 billion rupees of bills maturing in 12-months and sold only 5.86 billion rupees, at an average yield of 4.88 per cent.

A 2-year bond maturing on 15.12.2022 closed at 5.57/60 per cent on Wednesday, slightly down from 5.58/65 per cent at Tuesday’s closing.

A bond maturing on 15.01.2023 closed at 5.57/62 per cent on Wednesday, falling from 5.63/65 per cent from its last close.

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A bond maturing on 15.09.2024 closed at 6.05/10 per cent on Wednesday, down from 6.10/17 per cent at previous day’s closing.

A bond maturing on 01.05.2025 closed at 6.36/46 per cent on Wednesday, easing from 6.37/47 per cent at the previous day’s closing.

A bond maturing on 01.02.2026 closed at flat at 6.60/67 per cent from its previous close on Tuesday.

A bond maturing on 15.08.2027 closed at 6.90/95 per cent, steady from 6.90/98 per cent at previous day’s closing.

A bond maturing on 01.07.2028 closed at 7.05/15 per cent on Wednesday, unchanged from the previous closing.

A 10-year bond maturing on 15.05.2030 closed at 7.25/35 per cent, stable from 7.25/40 per cent at the previous day’s closing.

In other news, President Gotabaya Rajapaksa has directed Sri Lanka’s Ministry of Transport to terminate a Japan International Cooperation Agency (JICA)-funded light railway transit (LRT) project with immediate effect.

President Gotabaya Rajapaksa, also he will go among the people to provide swift solutions to their issues at the village level, a press release from the Presidential Secretariat said. He will meet people living in the Haldummulle Divisional Secretariat Division of the Badulla district this Friday to kick off the program.

Meanwhile, the country is also in the process of drafting a new bill on “obscene publications” to curb child pornography as such material has been proliferating rapidly owing to recent advances in information technology and other media.

In terms of economy, the country’s national inflation grew to 6.1 per cent in August. Sri Lanka’s national inflation rose to 6.1 per cent to 6.2 per cent in August 2020 from a year earlier with consumer prices in the month rising 0.4 per cent, data from the state statistics office showed.

Sri Lanka’s National Consumer Price Index grew to 137.8 points in August from 137.3 points in July with food prices rising 0.5 per cent. Sri Lanka’s food prices have risen 13.2 per cent in the 12 months to August 2020 accelerating from 12.9 per cent in July.
Non-foods grew 1.1 per cent in the 12-months.

The Monetary Board of the central bank had also approved the provision of foreign exchange cover between one to two years for foreign investors in rupee government securities and unspecified other sectors. The cover will apply for new investments between 25 million and 1,000 billion dollars.

In politics, opposition continues to protest the 20th Amendment which was tabled in the parliament on Tuesday. The 20th Amendment to the Constitution which proposes to take away power from Parliament and vest them with the President. Justice Minister Mohamed Ali Sabry tabled the proposal for its First Reading. This allows objections to be raised to the amendment within the next seven days.
(Colombo/ Sep23/2020)

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