Sri Lanka rupee gains, bond yields stable

ECONOMYNEXT- Sri Lanka’s rupee closed stronger at 178.30/45 to the US dollar in the spot market on Wednesday, while bond yields were stable and stocks fell 0.33 percent the day after the budget, brokers and dealers said.  

 The rupee closed at 179.00/10 to the US dollar in the spot market on Tuesday, gaining from 179.55/70 on the previous market day.
Currency dealers said banks were releasing dollars into the market on exporter demand for converting dollars into rupees.
The Central Bank had been concerned over exporters keeping earned dollars abroad and borrowing from local banks for working capital.
Despite the regulator injecting liquidity into the banking system last week, the liquidity short remains at around 27 billion rupees.
Banks are also dealing with increasing bad loans.
In government securities, the primary bills market saw yields fall 3 basis points at Wednesday’s auction, continuing the fall seen the previous week.
Yields have so far fallen this year, except for two weeks in mid-February, when there were gains.
The state debt office had offered 24 billion rupees in bills, split over 3-month, 6-month, and 12-month maturities.
It had sold 24 billion rupees in 12-month bills after offering 14 billion rupees.
There were no sales of 3-month and 6-month bills.
Dealers said there was buying pressure from banks on bills after the Central Bank injected liquidity into money markets on March 01.
In the secondary market, there were only a few trades, and yields were stable, dealers said.
Twelve-month bills were quoted at 10.60/65 percent on Wednesday morning, down slightly from 10.62/65 percent at Tuesday’s close.
A bond maturing on 01.08.2021 was quoted at 10.70/77 percent today, easing from Tuesday’s 10.72.77 percent. 
A bond maturing on 15.07.2023 was quoted at 10.85/95 percent on Wednesday, flat from Tuesday’s close.  
A 7-year bond maturing 01.08.2026 was quoted at 11.13/20 percent, slightly higher than yesterday’s close of 11.12/18 percent.
A bond maturing on 15.06.2027, quoted at 10.20/25 percent on Wednesday, compared to 11.20/27 percent at Tuesday’s close.  
A bond maturing on 01.09.2028, quoted at 11.28/38 percent, wider from yesterday’s 11.30/35 percent.
At the Colombo Stock Exchange, the All Share Price Index closed 0.33 percent or 18.97 points lower at 5,751.60 on Wednesday.
The All Share had gained up to 5,778 in the morning session before the tumble.
The more liquid stocks on the S&P SL20 Index were down 0.16 percent or 4.53 points at 2,881.86.
Market turnover was 385.13 million rupees.
Stockbroker First Capital said the volume of shares traded recorded a near two week low while turnover was below the daily average so far this year.
Foreigners were selling, with net outflows of 317.8 million rupees.
Trading of John Keells Holdings shares accounted for 81.5 percent of the market turnover.
Brokers said the market was still digesting the budget proposals from yesterday.
The budget was positive on tourism, construction, and manufacturing industries, while the tobacco and alcohol firms saw the expected annual increase in taxation, brokers said.
The All-Share was weighed down by Commercial Leasing & Finance, which closed 20 cents lower at 2.40 rupees per share, and Brown & Company, which was down 4.10 rupees at 51.30 rupees per share.
The John Keells Holdings share closed 50 cents lower at 156.50 rupees.
Share prices of 34 firms gained on Wednesday, while 81 fell. (Colombo/Mar06/2019-SB)

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