Sri Lanka rupee ends weaker, gilt yields fall
ECONOMYNEXT – Sri Lanka rupee closed marginally weaker at 185.80/95 to US dollar in the spot market on Wednesday while bond yields eased after the monetary policy rate cut and stocks gained, dealers and brokers said.
Rupee closed at 185.75/85 to the greenback on Tuesday.
In equities the Colombo’s All Share Price Index advanced 0.41 percent or 20.89 points to close at 5,090.41.
The S&P SL20 index of more liquid stocks climbed 0.45 percent or 9.98 points to 2,205.66.
The market turnover was 967.5 million rupees with 90 stocks gaining and 54 falling.
Net foreign sales in the market today was 181.2 million rupees.
Crossing in the market contributed 19 percent to the market turnover amounting to 187 million rupees in Hemas Holdings, John Keells Holdings and Cargills counters.
LOLC Holdings PLC contributed most to ASPI spike, gaining 5.80 rupees a share to trade at 125.90 rupees.
Other stocks that pushed ASPI were, John Keells Holdings stocks which gained a rupee to trade at 114.00 rupees a share, and Ceylon Cold stores shares up 9.80 cents to trade at 699.90 rupees a share.
On the other end, Ceylon Tobacco Company stocks dropped 23.70 rupees (2.43 percent) rupees to trade at 951.00 rupees a share.
In the secondary government securities market, gilt yields were down in active trading, dealers said.
Dealers said the maturities ranging from 2022 to 2024 were seen liquid in the market for the day.
Sri Lanka’s Central Bank cut its monetary policy rate by 100 basis points bringing the rate at which money is injected to the banking system at 5.50 percent and the rate at which excess money is withdrawn to 4.50 percent.
Central Bank said that it arrived at this decision with a view to inducing a further reduction in market lending rates, thereby encouraging the financial system to aggressively enhance lending to productive sectors of the economy, which would reinforce support to COVID-19 hit businesses as well as to the broader economy, given conditions of subdued inflation.
However, market dealers said they did not witness such a large fall in bond yield rates in comparison to the rate cut.
A 2-year bond maturing on 15.12.2022 closed at 5.50/53 percent on Thursday, down from 5.75/80 percent at Wednesday’s close.
A bond maturing on 15.01.2023 closed at 5.60/63 percent, easing from 5.85/90 percent at Wednesday’s close.
A bond maturing on 15.09.2024 closed at 6.28/34 percent, down from 6.42/47 percent at Wednesday’s closing.
A bond maturing on 01.05.2025 closed at 6.45/53 percent on Thursday, slipping from 6.58/66 percent at Wednesday’s closing.
A bond maturing on 01.02.2026 closed at 6.60/70 percent, down from 6.68/78 percent.
A bond maturing on 15.10.2027 closed at 6.75/83 percent, easing from 6.90/7.00 percent at Wednesday’s end. (Colombo/July09/2020)