Bond market activity remains robust; yields edge down further

• Rupee holds ground 

The secondary bond market commenced the week with activity remaining strong and yields dropping down further, carrying over the bullish momentum from the previous week. Trading continued to be predominantly on the short end of the yield curve, with aggressive buying concentrated on 2026-2028 durations. The popular 2026 durations (01.02.26, 01.06.26 and 01.08.26) were seen trading down from intraday highs of 12.10% to 11.85%, on the back of sizeable volumes. Similarly, 2028 durations as well were seen trading on considerable volumes, down from intraday highs of 12.85% to 12.65%. Additionally, trades were observed on the maturities of the 2025’s (15.01.25, 01.07.25) and 15.09.27 within the ranges of 11.50% and 12.60% to 12.49% respectively.

The total secondary market Treasury bond/bill transacted volume for 02nd February was Rs. 22.39 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.10% and 9.63% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 37.95 billion at the weighted average rates of 9.17%.

The net liquidity surplus stood at Rs. 12.69 billion yesterday as an amount of Rs. 7.16 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00% against an amount of Rs. 57.80 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 9.00%. 

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day broadly steady at Rs. 312.40/312.80 against its previous day’s closing level of Rs. 312.25/312.60.

The total USD/LKR traded volume for 2 February was $ 102.44 million.