Bond market activity remains moderate; yields steady

• CCPI drops to 4.0% YoY in August 2023; lowest level since rebase in 2023
• Rupee appreciates marginally

By Wealth Trust Securities 

 The secondary bond market activity remained dull yesterday. Limited trades were seen on the maturities of the 01.08.26 and 01.07.28 at levels of 15.95% and 15.00% respectively.

In secondary bills, October and November 2023 maturities traded at 17.70% to 17.90% and 18.48% to 19.25% respectively.

The total secondary market Treasury bond/bill transacted volume for 21st August 2023 was Rs. 39.62 billion.

Meanwhile, the Colombo Consumer Price Index -CCPI (Base: 2021=100) for the month of August decreased sharply to 4.00% on its point to point as against 6.30% recorded in July and a peak of 50.6% in February of 2023. This is the lowest level witnessed in the CCPI since the index was rebased, at the start of the year 2023. The figure also beats a Bloomberg consensus estimate of 4.5%.

In money markets, the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and 31-day reverse repo auctions for a volume of 67.75 billion and 27.5 billion at weighted average rates of 11.62% and 14.33% respectively. While an amount of Rs. 60.70 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 12.00%. The net market liquidity deficit stood at Rs.101.11 billion yesterday.

The weighted average rates on overnight call money and repo were registered at 11.50% and 12.00% respectively.

Forex Market 

In the Forex market, the Rupee or USD/LKR rate on spot contracts appreciated marginally to close trading yesterday at Rs.319.50/320.50 against its previous day’s closing level of Rs.320.75/321.75.

The total USD/LKR traded volume for 29 August 2023 was $ 75.20 million.

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