ECONOMYNEXT – Sri Lanka’s rupee closed weaker at 176.50/60 to the US dollar in the spot market on Wednesday while bond yields edged up, dealers said.
The rupee closed at 176.45/55 against the US dollar on Tuesday.
Liquidity in overnight money market surged to 59.6 billion rupees on Wednesday from 36.4 billion rupees on Tuesday.
The central bank mopped up 30 billion rupees through an overnight repo auction at 7.80 percent.
Another 6.25 billion rupees was mopped up at 8.1 percent through a 20 billion rupee 8-day term repo auction held on Tuesday, while 7.6 billion rupees were mopped up through a 7-day term repo auction at 8.11 percent.
The state debt office unexpectedly rejected 12-month bills at the weekly auction held on Wednesday, for the first time since October 2018, after offering 11 billion rupees in bills, dealers said.
The government had covered the shortfall through more 3-month and 6-month bills than offered.
Market participants had quoted higher rates on the 12-month bills, as the spread between the 12-month bills and 2-year bonds were over 80 basis points, dealers said.
The bond auction on Thursday will also offer 2-year bonds which is an alternative for the 12-month bill buyers, dealers said.
In the secondary bond market, gilt yields edged up with moderate activity in the morning session before the bill auction, and became quiet in the afternoon session dealers said.
Twelve month bills closed at 8.85/00 percent on Wednesday, down from 8.88/95 percent at Tuesday’s close.
A bond maturing on 15.12.2021 closed at 9.70/80 percent, up from 9.60/75 percent.
A bond maturing on 15.03.2023 closed at 10.20/30 percent, stable from 10.20/25 percent.
A bond maturing on 15.03.2024 closed at 10.35/40 percent, up from 10.30/38 percent.
A bond maturing on 01.08.2026 closed at 10.55/65 percent on Wednesday, stable from 10.55/60 percent at Tuesday’s close.
A bond maturing on 15.01.2027 closed at 10.60/70 percent, stable from 10.60/75 percent.
A 10-year bond maturing on 01.05.2029 closed at 10.70/80 percent, up from 10.60/75 percent. (Colombo/Jun12/2019)