Sri Lanka rupee gains at open, bond yields fall

ECONOMYNEXT- Sri Lanka’s rupee opened at 174.55/60 to the US dollar in the spot market Thursday, while bond yields fell on buying pressure, market participants said.

The rupee closed at 174.65/75 to the US dollar in the spot market on Wednesday.

Dealers said bond markets were active, with buying pressure after yields fell at a bill auction yesterday.

At the primary bill auction on Wednesday, weighted average yields on 12-month bills fell 16 basis points from a week earlier, continuing a downward trend for the seventh consecutive week.

The public debt office raised 25 billion rupees in 3-month, 6-month, and 12-month maturities.

The government’s decision to repay overdues to construction firms and banks has generated buying interest for bonds as well, dealers said.

Private credit has slowed down amid an inactive construction sector, which was awaiting the repayments, and banking sector bad loans may start to go down with the government’s move, analysts say.

The Central Bank is also expecting liquidity injections of around 25-30 billion rupeess into money markets as credit margins held for vehicle imports get released.

The Central Bank was also seen purchasing dollars, releasing further liquidity.

In the secondary market, twelve-month bills was quoted at 9.85/95 percent on Thursday, down from 10.00/15 percent at Wednsay’s close.   

A newly issued bond maturing on 15.03.2022 was quoted at 10.42/48 percent, down from 10.55/60 percent.  
A bond maturing on 15.07.2023 was quoted at 10.62/68 percent, down from 10.80/85  

A 5-year bond maturing on 15.03.2024 was quoted at 10.75/80 percent, down from 10.90/95 percent. 

A bond maturing on 01.06.2026 was quoted at 10.95/03 percent, down from 11.00/10 percent.

New bond maturing on 15.01.2027 was quoted at 10.98/03 percent, down from 11.10/17 percent.  

A bond maturing on 01.05.2029 was quoted at 11.12/20 percent, down from 11.27/33 percent.   (Colombo/Apr11/2019-SB)

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