ECONOMYNEXT – Sri Lanka’s rupee closed weaker at 201.00/202.50 to the one week US dollar on Thursday while gilt yields edged up ahead the bond auction on Friday, dealers said.
The rupee last closed in the one-week forward market at 202/203 to the US dollar on Thursday.
Sri Lanka had its policy review meeting on April 09th.
The central bank’s rate setting Monetary Board said after an April 07 meeting, it is keeping a policy rate at which money is injected overnight at 5.5 percent and the rate at which excess money is deposited at 4.5 percent.
“The Board arrived at this decision after carefully considering the macroeconomic conditions and expected developments on the domestic and global fronts,” the central bank said in its April Monetary Policy Statement.
“The Board remains committed to maintaining the low interest rate structure, thereby ensuring continued support for a sustained economic recovery, in the context of the prevailing low inflation environment and well anchored inflation expectations.”
The central bank’s current monetary policy involves keeping a ceiling rate at 5.5 percent, which is used to finance overnight reserves shorts of over-trading banks (usually state banks) and injecting liquidity at a ceiling rate set for Treasury bill auctions.
In the secondary market bond yields are gained after the policy review and ahead tomorrow’s bond auction, dealers said.
Sri Lanka’s debt office is selling 40 billion bonds in an auction to be held on April 09.
“With the stable policy outcome and ahead of the bond auction tomorrow, the secondary bond market yield curve witnessed a slight upward shift with selling pressure, while overall market recorded limited activities with thin volumes,” FirstCapital Market Research said.
A bond maturing on 15.12.2022 closed at 5.95/6.00 per cent on Thursday, up from 5.90/95 per cent on Wednesday.
A bond maturing on 15.11.2023 closed at 6.40/50 per cent on Thursday, up from 6.35/43 per cent on Wednesday.
A bond maturing on 01.12.2024 closed at 675/85 per cent, up 6.65/75 per cent from Wednesday.
A bond maturing on 01.05.2025 closed at 6.80/7/00 per cent.
A bond maturing on 15.02.2026 closed at 7.20/35 per cent, up 7.10/25 per cent.
A bond maturing on 15.08.2027 closed at 7.50/80 per cent.
A bond maturing on 01.05.2029 closed at 8.00/30 per cent, steady 8.00/20 per cent Wednesday.
A bond maturing on 15.05.2030 closed at 8.20/50 per cent, up 8.00/30 per cent on Wednesday. (Colombo/April08/2021)