Sri Lanka rupee ends steady, gilts edge higher after policy rate cut

ECONOMYNEXT -Sri Lanka rupee closed steady at 176.40/50 rupees to the US dollar on Friday and gilt yields edged higher on profit taking in the secondary market even as the Central Bank cut policy rates to revive credit demand, while stocks ended 0.26 percent lower, market participants said.

The rupee ended at 176.40/50 rupees against the greenback in the spot market on Thursday.

Sri Lanka’s central bank cut its policy corridor by 50 basis points to 7.50 percent and 8.50 percent as a credit contraction has made the floor rate the active policy rate.

Overnight call money was quoted at 7.94 percent end of day Friday, down from 8.43 percent the previous day, and the repo was down to 8.07 percent from the previous day’s 8.58 percent closing. 

In the secondary bond market, yields were higher on profit taking as investors had already anticipated and factored in the rate cut, dealers said.

A bond maturing on 15.12.2021 closed at 9.35/45 percent on Friday, down from 9.40/45 percent at Thursday’s close.

A bond maturing on 15.03.2023 closed at 9.85/90 percent, gaining from 9.83/88 percent.

A bond maturing on 15.03.2024 closed flat at 9.97/10.01 percent.

A bond maturing on 01.08.2026 closed at 9.35/33 percent, up from 9.25/32 percent.

A bond maturing on 15.01.2027 closed at 10.36/40 percent on Friday, up from 10.30/37 percent at the previous close.

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A 10-year bond maturing on 01.05.2029 closed at 10.45/49 percent, steady from 10.45/52 percent.

In equities, Colombo’s All Share ended 13.59 points lower at 5,310.95 and the S&P SL20 index of more liquid stocks fell 0.33 percent, or 8.27 points, to 2,469.82.
Market turnover was 167.7 million rupees with 47 stocks gaining and 64 declining.

Asiri Hospital Holdings (down 1.20 rupees to 19.30 rupees), John Keells Holdings (down 0.70 cents to 137.30 rupees) and Commercial Bank (down 80 cents to 91.60 rupees), contributed to the benchmark index decline.  

Net foreign selling was 11.3 million rupees against net foreign buying of 42.4 million rupees on Thursday.

Foreign selling in Hemas Holdings was 13.7 million rupees, according to Asia Securities. The stock ended 10 cents lower at 68 rupees.

 

A crossing in Hatton Plantation PLC contributed 27 percent or 45.5 million rupees to the turnover. The stock ended 10 cents higher at 7.90 rupees. (COLOMBO, 31 May 2019)

 

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