ECONOMYNEXT – Sri Lanka’s rupee was quoted around 145.20/40 to the US dollar in the spot next forex market and long bond yields eased lower as banks and primary dealers borrowed over 40 billion rupees overnight from a cash auction.
Sri Lanka’s rupee which topped over 149 to the US dollar in the spot next forex market, serving as a reference rate, has strengthened sharply last week with expanding liquidity shortages pointing central bank intervention.
The spot market rate for the US dollar is still ‘officially’ 143.90 rupees.
In a pioneering moral suasion moving during this currency crisis now seems to be directed also at bank TT selling rates, market participants say.
On Friday market participants borrowed 30 billion rupees at 7.99 percent from an overnight reverse repurchase auction and another 30 billion rupees from a standing liquidity window at 8.0 percent.
Other liquid banks deposited 27 billion rupees in the excess liquidity window at 6.5 percent.
On Monday, a reverse repo auction pumped 40 billion rupees. Among borrowers from the overnight printed money window are primary dealers who bought 14-year bonds at 14.23 percent or higher.
They are now sitting on capital gains of as much as 200 basis points or higher, barely a week after the auction. On Monday some bond yields fell further from Friday’s close.
Selected bond yields quoted around mid-day Monday are given below.
2-year bonds maturing on 01.04.2018 were quoted at 11.20.40 percent down from Friday’s close of 11.35/45 percent.
2-year bonds maturing on 01.02.2018 were quoted at 11.20/40 percent down from 11.35/45 percent
2-year bonds maturing on 1.04.2018 were also quoted at 11.20/40 percent
3-year bonds maturing on 01.07.2019 were quoted at 11.50/75 percent down from 11.65/85 percent Friday.
4-year bonds maturing on 01.05.2020 were quoted at 12.00/10 down from 12.15/25 percent.
5-year bonds maturing on 01.08.2021 were quoted at 12.10/20 down from 12.85/35 Friday
9-yearb bonds maturing on 15.03.2025 12.25/40 down from 12.40/60 Friday auctioned on March 29 at 13.80 percent.
14-year 15.05.2030 12.66/75 down from 12.85/13.00 Friday auctioned on March 29 at an average yield of 14.23 percent. (Colombo/Apr04/2016)