ECONOMYNEXT – Sri Lanka’s rupee closed stronger at 176.20/30 to the US dollar in the spot market on Wednesday, while bond yields were flat dealers said.
The rupee closed at 176.80/90 to the greenback on Tuesday.
Liquidity in the overnight money market remained stable at around 25 billion rupees for the third consecutive day after the Central Bank mopped up 10 billion rupees in liquidity through a 2-day repo auction.
Central Bank has not yet begun selling its own holdings of bills, which has remained at 160.28 billion rupees.
Dealers said the current level of liquidity was optimal, and if it fell to around 10 billion rupees, investors may start selling bonds, leading to an upward movement in rates.
Yields at a primary bill auction today fell, with rates for 12-month bills falling 26 basis points.
The state debt office sold 21 billion rupees in bills, the exact amount offered.
Dealers said gilt yields fell on Wednesday due to the outcome of the bill auction, and continued liquidity surplus in the money market, with buying interest favouring shorter-term tenors.
The market was actively trading, with foreigners buying, especially the mid-term 15.03.2024 maturity, dealers said.
A bond maturing on 15.12.2021 closed at 9.80/90 percent on Wednesday, falling from 9.85/95 percent on Tuesday.
A 4-year bond maturing on 15.03.2023 closed at 10.33/40 percent, down from 10.42/47 percent.
A bond maturing on 15.03.2024 closed at 10.40/47 percent, down from 10.50/55 percent.
A 7-year bond maturing on 01.08.2026 closed at 10.67/73 percent, down from 10.70/75 percent.
A bond maturing on 15.01.2027 closed at 10.72/78 percent on Wednesday, falling from Tuesday’s 10.75/80 percent.
A 10-year bond maturing in 01.05.2029 closed at 10.83/90 percent, easing from 10.85/92 percent. (Colombo/May15/2019)