Bond market activity picks up; yields decrease

Friday, 20 May 2022 01:41 - - {{hitsCtrl.values.hits}}

Policy rates held steady

by Wealth Trust Securities

The secondary bond market activity was seen increasing yesterday while yields decreased following the monitory policy announcement at where the Central Bank of Sri Lanka was seen holding policy rates steady at 13.50% and 14.50% on its Standing Deposit Facility Rate (SLDR) and Standing Lending Facility Rate (SLFR) respectively.

The liquid maturities of 01.06.25 and 01.05.27 saw its yields dip to intraday lows of 22.75% and 21.75% respectively against its previous day’s closing levels of 23.40/50 and 22.00/50. In secondary bills, 3 June and August maturities changed hands at levels 18.00% and 19.75% to 22.00% respectively.

The total secondary market Treasury bond/bill transacted volume for 18 May was Rs. 9.23 billion. In money markets, the net liquidity deficit stood at Rs. 609.58 billion yesterday as an amount of Rs. 173.28 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 13.50% against an amount of Rs. 782.86 billion withdrawn from Central Banks SLFR (Standard Deposit Facility Rate) of 14.50%. The weighted average rates on overnight Call money and REPO stood at 14.50% each. Furthermore, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen injecting an amount of Rs. 60 billion by way of a 40-day Reverse Repo auction at a weighted average rate of 22.60%, valued today.

Forex Market

In the Forex market, the middle rate for USD/LKR spot contracts appreciated marginally to Rs. 359.55 yesterday against its previous day’s Rs.359.65

The total USD/LKR traded volume for 18 May was $ 15.80 million.

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