Sri Lanka rupee stable, bond yields ease

ECONOMYNEXT- Sri Lanka’s rupee closed stable at 181.85/95 to the US dollar in the spot market on Friday while bond yields eased, dealers said.

The rupee ended at 181.85/90 to the greenback on Thursday.

In the overnight money market, liquidity up 43.98 billion rupees, down from 66.18 percent.

Banks deposited 38.13 billion rupees through Central Banks’ excess liquidity window.

Central Banka mopped up 7.96 billion rupees at 6.96 percent through an overnight repo auction.

In the government securities market, bond yields fell in moderate trade while 2024 maturities remained liquid, dealers said.

Dealers said the secondary market remained mixed throughout the month, initially easing after Central Bank cut rates which pushed the market down to 25 basis points, after which market gained to 9.75 percent levels to slide down again when the debt office offered a bond buyback pushing rates further down to 15-20 basis points, meanwhile a bond auction in between moved the rates up 15-20 basis points to settle at 9.70 percent levels.

Sri Lanka’s bond yields fell after the central bank cut its policy corridor 50 basis points to 7.50 percent and 6.50 percent in late January.

On February 19, 2020, the Central Bank conducted an outright bond buy back on 2024 maturities under open market operations and received bids for 29.4 billion rupees and accepted only 9.0 billion rupees worth of bonds in the range of 9.60-9.69 percent levels.

Dealers also said that the foreign investors continued to exit the market mainly because investors were moving to safe havens and due to the increase of Sri Lanka’s sovereign bond rates shooting up as a result of coronavirus

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A bond maturing on 15.12.2021 closed at 9.80/95 percent on Friday, gaining from 8.75/95 percent at Thursday’s close.

A bond maturing on 01.09.2023 closed at 9.30/40 percent, stable from 9.30/45 percent at its previous close.

A bond maturing on 15.09.2024 closed at 9.70/75 percent on Friday, gaining from 9.60/67 percent at Thursday’s close.

A bond maturing on 15.10.2027 closed flat at 9.80/95 percent from Thursday’s close.

A bond maturing on 15.05.2030 closed 10.00/10.10 percent on Friday, up from 9.90/10.10 percent at yesterday’s close.

A bond maturing on 15.09.2034 closed at 10.00/10.20 percent, gaining from 9.80/15 percent its last close. (Colombo/Feb28/2020)

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