91-day bill weighted average crosses 8%

• Monetary policy announcement in focus

The upward trend in primary market rates continued at yesterday’s weekly Treasury bill auction as the weighted average rate on the 91-day, or three-month, Treasury bill was seen exceeding 8% for the first time since 10 July 2019. The accepted volume on the 91-day bill was Rs. 50.42 billion which incidentally was the total accepted amount at the auction as well, due to bids on the 182-day and 364-day bills being rejected. The 91-day bill recorded a steep increase of 89 basis points week-on-week to 8.04%. The bids to offer ratio stood at 1.64:1.

 Meanwhile, limited activity was witnessed in the secondary bond market yesterday, solely on the 15.12.23 maturity within the range of 9.75% to 10%. 

This was ahead of today’s monitory policy announcement due at 7:30 a.m., the seventh for the year 2021. The Monetary Board of the Central Bank of Sri Lanka, at its announcement on 19 August increased its SRR (Statutory Reserve Requirement) rate applicable for all rupee deposit in Licensed Commercial Banks by 200 basis points, while increasing its policy rates by 50 basis points to 5% and 6% on its Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) respectively.

The total secondary market Treasury bond/bill transacted volume for 12 October was Rs. 18.16 billion.   

In money markets, the net liquidity deficit was registered at Rs. 38.58 billion yesterday as an amount of Rs. 98.93 billion was deposited at the Central Bank’s SDFR (Standard Deposit Facility Rate) of 5% against an amount of Rs. 144.78 billion withdrawn from the Central Bank’s SLFR (Standard Lending Facility Rate) of 6%. The weighted average rates on overnight call money and Repo remained steady at 5.92% and 5.93% respectively, while the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka drained out an amount of Rs. 7.27 billion by way of a two-day Repo auction at a weighted average rate of 5.99%.

 USD/LKR   

The Forex market remained inactive yesterday.

The total USD/LKR traded volume for 12 October was $ 32.45 million.   

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)